Total leasing activity declines in Suburban Philadelphia as larger deals make up a greater share of activity
As a whole, total leasing activity across the submarkets has generally moved in sync with the average deal size
July 03, 2019
- In an analysis of Class A and Class B office leasing activity for the 10 largest suburban Philadelphia submarkets over the past five years, King of Prussia led the way with 4.7 million square feet of activity as a result of leasing 4.7% of its total inventory every half year, on average, during this time. Fort Washington (6.1%) was the only submarket with higher average leasing activity as a percentage of inventory, which was aided by its average deal size of 11,200 s.f., 3,110 sf higher than the average deal size across these ten submarkets over the past five years.
- As a whole, total leasing activity across these submarkets has generally moved in sync with the average deal size. However, over the past 18 months, this dynamic has changed. Since the 2nd half of 2017, the average deal size has increased 10% while leasing activity has declined 12%. This separation indicates that larger lease transactions are taking a greater chunk of the total leasing activity pie. It remains to be seen if this is part of a cyclical trend or if smaller deals eventually contribute to leasing activity at their historical rate. Potential reasons for their decline could include existing users expanding their footprint when their leases turnover, smaller occupiers being hesitant to commit to leases, or greater utilization of coworking. Today, coworking represents less than 0.5% of total Pennsylvania Suburban office inventory and may be ripe for expansion.
Source: JLL Research, CoStar