Philadelphia: Conshy, Radnor, KoP experience prosperous decade while Bala, Valley Forge, and Central Bucks stagnate
A lot has happened in the Pennsylvania suburban office market over the past decade.
January 22, 2020
- A lot has happened in the Pennsylvania suburban office market over the past decade. Thanks to the longest economic expansion in U.S. history, rental rates across all primary and secondary submarkets have surged, and only the Central Bucks County submarket has stagnated with no rental rate growth and no new construction.
- The Radnor, Conshohocken, Plymouth Meeting / Blue, and King of Prussia / Wayne submarkets all saw rental growth rates of 30%+ over the past decade. Radnor and Conshohocken in particular enjoyed large gains in rentals rates, with 69.2% and 56.0% increases since 2010.
- As the labor market has continued to tighten, employers have sought to differentiate themselves from their competition by moving into newly constructed and renovated space. Conshohocken paints a clear picture with new projects such as Sora West and Seven Tower Bridge commanding top of market rents for premium space. Population growth has played an important role as well. Chester and Montgomery Counties both saw population increases of 3.9% and 3.1%, respectively, whereas Delaware and Bucks County saw meager increase of just 1.0% and 0.4%.
- Expect rental rate growth to continue in the short term in markets with a robust pipeline of short-term proposed projects. Projects like 155 Radnor in Radnor and 650 Park in King of Prussia will supply additional space at a premium. If rental rates in top submarkets begin to exceed tenants’ willingness to pay, there will be a renewed interest in cheaper submarkets which will then generate higher rents.
Source: JLL Research