Skip Ribbon Commands
Skip to main content

Q3 CBD leasing activity remained slow at 37% below 2016’s Q3 YTD total, but employment figures and lease expirations suggest it’s a pause in the market

  • ​CBD leasing activity has maintained a quarterly average of approximately 700,000 square feet over the last five years. During this same time, new supply has been limited and net demand has been strong enough to hold vacancy at or below 10 percent and to carry rental rates up five dollars in five years. For the first time since 2014, rents took a dip this quarter as leasing activity YTD has fallen compared to years past.
  • While this recent softening appears at odds with the overwhelmingly positive downtown narrative, there are several explanations for this dynamic. The first is that the majority of job growth within Greater Center City has been in “eds, meds, and beds.” The booming hospital and research complexes of University City are a testament to the 55% growth in higher education and medical jobs since 1990. Professional and business services are up only 11% since that same year, which helps to contextualize our positive but slow absorption of space.
  • The pending wave of lease expirations for large tenants also contributes to the current calm. As those peak through 2020, and suburban tenants continue to seek a presence downtown, leasing activity will accelerate. Whether absorption follows suit will depend on whether renewals involve significant contraction. ​​

Source: JLL Research




Get our latest insights

Subscribe

Connect with us