As Philadelphia's Central Business District office availability has continued to climb since the pandemic (24.8% at the end of Q2 2024), Savills examined a few of the market trends in the first half of 2024.
Key takeaways:
- The flight-to-quality in Philadelphia's CBD continued in the first half of 2024. Out of the nearly 600,000 square feet of office leases signed in H1, 89% were executed at Trophy and Class A buildings.
- With the recent sale of 1760 Market Street, investors have kicked off the process of acquiring Center City assets at steep discounts, which in turn allows them to lower asking rents substantially to compete for tenants.
- While average Class A asking rents ($38.66 psf) are 20.0% lower than Trophy rents ($46.39 psf), we anticipate that some tenants will continue to right-size and focus on efficiency, which allows them to potentially occupy less space in nicer buildings for the same cost.