Wanted in Philadelphia: Suburban Class A office space
Economic expansion has caused most CBD submarkets to tighten substantially since the last recession, but the suburbs have been slower to catch up.
- Economic expansion has caused most CBD submarkets to tighten substantially since the last recession, but the suburbs have been slower to catch up. Market conditions in Secondary and Tertiary submarkets in the Pennsylvania Suburbs have changed considerably since 2014, however. Tertiary submarkets have experienced the largest decline in Class A vacancy since 2014, falling nearly seven percentage points. While this decline is notable, the tertiary submarkets only represent approximately 6.6 percent of overall Class A stock. More notably, Secondary submarket vacancy fell nearly four percentage points. Core submarket vacancy has fluctuated during the same period but has remained below 10 percent. Overall, vacancy across suburban Class A product has fallen 210 basis points since 2014.
- The declining vacancy rates state the obvious: Class A space is in demand across the entire region. While some might argue that known spec suburban construction could cause vacancy to rise, the market has been undersupplied in Class A space for some time, and we expect any new large, quality blocks to be quickly absorbed.
Source: JLL Research