George Cauffman III, executive vice president, CBRE, Philadelphia, PA
PHILADELPHIA, PA—Class A asking rates throughout the region hit an all-time high of $30 per square foot, propped up heavily by the Central Business District and the Philadelphia suburbs, according to CBRE's first quarter 2019 office market report.
“Landlords typically prefer to see demand before increasing rents and last year was a record year for demand,” says George Cauffman, executive vice president, CBRE. “As a result, landlords responded accordingly and asking rents spiked at the start of 2019. Enhancing this trend is the high level of investment activity in the office sector, with landlords expecting increased returns.”
During the first quarter, however, the net absorption rate decreased by 19,467 square feet from the previous quarter as a result of corporate downsizing, although this was largely canceled out by positive demand growth in the surrounding suburbs, most notably in Northern Delaware.
“The decrease in occupancy did not come as a surprise, as large tenants continue to reduce their footprints or consolidate their employees within a single location,” says Cauffman.
On the capital markets front, the record sale of 1735 Market Street in Center City, Philadelphia helped keep office sales volume for the first quarter in the metro area in-line with recent quarterly figures. Other notable deals during the first quarter included the sale of Spring Mill Corporate Center in Conshohocken for $131 per square foot and Valley Forge Park Place for $106 per square foot.
Correction, 4/26/2019, 8:52 a.m.: Because of an editing error, an earlier version of this story described the CBRE report as covering the first quarter of 2018. It actually covers the first quarter of 2019.
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
