According to CBRE’s first quarter 2019 office market report, Class A asking rates throughout the region hit an all-time high of $30.00 per sq. ft, propped up heavily by the Central Business District and the Philadelphia suburbs.
“Landlords typically prefer to see demand before increasing rents and last year was a record year for demand,” said George Cauffman, Executive Vice President, CBRE. “As a result, landlords responded accordingly and asking rents spiked at the start of 2019. Enhancing this trend is the highlevel of investment activity in the office sector, with landlords expecting increased returns.”
During the first quarter, however, the net absorption rate decreased by 19,467 sq. ft. from the previous quarter as a result of corporate downsizing, although this was largely canceled out by positive demand growth in the surrounding suburbs, most notably in Northern Delaware.
“The decrease in occupancy did not come as a surprise, as large tenants continue to reduce their footprints or consolidate their employees within a single location,” added Cauffman.
On the capital markets front, the record sale of 1735 Market Street in Center City, Philadelphia helped keep office sales volume for the first quarter in the metro area in-line with recent quarterly figures. Other notable deals during the first quarter included the sale of Spring Mill Corporate Center in Conshohocken for $131.00 per sq. ft. and Valley Forge Park Place for $106.00 per sq. ft.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
