Office leasing volumes in the Pennsylvania suburbs consistently ahead of Philadelphia’s CBD
The office market in Pennsylvania’s suburban submarkets has seen more leasing activity than the CBD in all but one of the last ten years.
February 04, 2020
- Of the 73 million square feet of office leasing seen over the past decade in the five PA counties of the Greater Philadelphia region, 57.7 percent of all deals (42.1 m.s.f.) transacted in the suburban inventory, while 42.3 percent (30.9 m.s.f.) transacted in CBD properties. The spread between the city and suburbs varies considerably by year: in 2015 the suburbs experienced nearly double the velocity, whereas in 2019 the city came out only 15.2 percent behind the suburban total.
- The four suburban counties contain a larger office inventory in aggregate than the city, so while it is reasonable to expect that the suburbs would therefore see the most leasing, the volumes are disproportionate to inventory size. As a share of inventory, the suburbs saw an average of 8.0 percent of total office space transact in a given year. The CBD’s average since 2010 is 6.4 percent. On a total space basis, this works out to an average of approximately 3 million square feet leasing in an average year downtown, but 4.2 million square feet leasing in an average year in the suburbs.
- 2018 is the only year of the current cycle in which the city outpaced the suburbs for leasing (though it came close again in 2019 and is ahead in the first month of 2020). It is early to say whether this indicates a fundamental shift in regional velocity. In any given year, large deals such as headquarters relocations can cause major swings. New-to-market relocations such as Iovance and organic growth of anchor tenants such as Spark would need to occur more regularly for the city to take a firm lead.
Source: JLL Research