Regional Office Market | Overview

Key Trends

  • Following an increase in the third quarter, regional office market vacancy decreased back down to 11.9 percent, matching the midyear vacancy.
  • Annual absorption for 2017 minimally surpassed 2016’s total.
  • Asking rents increased by a mere 0.3% from the end of the second quarter. The 2.6 percent increase from the end of 2016 indicates that the steep rent growth from the previous two years was leveling off.
  • Overall office sales volume was up slightly in 2017. The average price per square foot continued to climb, reflecting both greater volume of upper-tier properties and better-leased Class B properties.

The regional office market continued to register moderate improvement overall in 2017, but activity has been sporadic each quarter and varying between submarkets. CBD Philadelphia had positive absorption for the 4th quarter after losing occupancy during the first three quarters. The Pennsylvania suburbs had almost 800,000 square feet of annual absorption, but multiple submarkets had declines in occupancy. Despite overall occupancy gains in Southern New Jersey, New Castle County, and the Lehigh Valley, growth has not been smooth and steady.