Market West pulling ahead in Philadelphia rent race as demand, investments continue
After two straight years of Market East’s Class A asking rental rate placing above its historically more expensive neighbor, the west side’s renewed momentum has allowed the Market West submarket to regain dominance in Center City.
- While not currently a large gap – Market West’s asking rate hovers just under $34 per square foot, with Market East about half a dollar below – 2020 is likely to widen the divide.
- Market West rents are up 5.7 percent year-over-year, one of the strongest rates of any submarket locally, but also pacing ahead of many other CBDs nationally, as absorption has slowed in the wake of job growth, which has in turn slowed rent gains. All told, Market West’s rental rate is 20 percent higher than it was in 2014, and though Market East’s increase since that year has been steeper, the repositioned properties most responsible for that climb are largely leased up (e.g. 1100 Ludlow).
- Market West’s steady climb is poised to continue thanks to a subset of Trophy and Class A buildings that are leveraging capital investments, limited availability on high floors, and the area’s ever-increasing appeal to drive rate, including 1735 Market and 1818 Market. With certain buildings able to push from the upper $30 range into the $40s, approaching territory seen previously in University City and nowhere else, Market West still has room to run in this market cycle despite an economic slowdown.
Source: JLL Research