Regional Office Market | Overview

Key Trends

  • The regional office market vacancy increased to 12.1% at the end of the second quarter of 2018.
  • Year-to-date absorption was essentially flat. There was slightly positive absorption for the second quarter, but a slight occupancy loss for the year.
  • Asking rents increased by 4.2% after leveling off at the end of 2017. Class B rents increased by 3.0%, while the average Class A rent dipped slightly.
  • Office sales volume increased due to multiple trades in CBD Philadelphia and Liberty Property Trust’s continued disposition of suburban assets.

Occupancy gains in some suburban submarkets were offset by a loss in others, and CBD Philadelphia’s occupancy continues to dip. There was an increase in sublease space in both the CBD and suburban markets. While densification and consolidation were major factors, some of the subleases resulted from relocations well in advance of existing lease expirations, and from corporate mergers.