Businesses re-open but many employees still working from home; leasing activity stalls and tenants seek short-term extensions

Six months after the onset of the COVID-19 pandemic, counties in southeastern Philadelphia slowly allowed businesses to reopen with strict social distancing guidelines during the third quarter. However, employers are still permitting their workforce to work remotely — and may continue to do so well into the new year. As a result, many tenants have delayed long-term real estate decisions, with some extending their current leases for the short term. For example, infrastructure and engineering firm AECOM executed a short-term extension of its 51,197-square-foot (sf) lease at 1700 Market Street. With delayed leasing decisions, leasing activity fell by 45.0%, quarter over quarter and the third quarter recorded only 583,206 sf of transactions. Notable deals that were able to close during this period include bank BNP Paribas’ leasing of 58,877 sf at 735 Chesterbrook Boulevard and Nerd Street Gamers taking 35,000 sf at 401 N Broad Street. In addition, Jefferson Health publicly announced that it signed a lease for a to-be-built, 643,000sf project downtown. The project will include a 492,000-sf medical facility. Savills represented Jefferson Health in the transaction.

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