2018 leasing activity in the Pennsylvania Suburbs of Philadelphia outperformed the CBD by 9.8 percent

February 18, 2019
  • The Pennsylvania Suburbs have led the region in leasing activity throughout this cycle averaging 4.3 million square feet annually over the past five years. The CBD has had more consistent but slower leasing volume, averaging 2.9 million s.f. annually. While the suburbs have outperformed the city every year, the lead has shrunk: the suburbs saw nearly 89 percent more activity in 2015, but less than 10 percent more deals inked than the city saw in 2018. 
  • 2018’s split of leasing volume tracks most closely with what a purely balanced market would produce: the suburban inventory is 11.9 percent larger than the CBD, so absent other factors, one would expect the suburbs to maintain a modest lead in total leasing volume. By this measure, the city has underperformed in recent history. This holds true when considering leasing volume in terms of how much of the stock has “turned over” in a given year. From 2014 to 2018, the PA Suburbs saw an average of 8.2 percent of its stock leased annually, while the CBD’s five-year average was 6.3 percent of stock. This is another measure of the suburbs’ stronger leasing volume performance. 
  • Is the more even split of 2018 the new normal, or an anomaly? Both the CBD and the suburbs have seen some long-anticipated leases cross the finish line, eliminating many of the largest users from future leasing tallies. But the large lease cycle isn’t over, particularly downtown: several major law firms are anticipated to make decisions in the coming years, and projects like Schuylkill Yards are developing pipelines of new-to-market prospects. 

Source: JLL Research, CoStar

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