Q4 market highlights:
Rent growth slowed. The region’s overall asking rent held flat quarter over quarter at $28.77 per square foot. In Philly’s CBD, the overall asking rent declined from Q3 to $34.16. Quarter over quarter, the CBD class A rate, at $36.70 per square foot, remained flat all four quarters.
Owners are hesitant to heavily discount rents. Instead, office landlords are willing to offer tenants favorable concessions and flexible lease term provisions.
Major deals are getting done in the West Market district. Notable transactions during the quarter included Blank Rome’s 196,000 square-foot lease renewal at 130 N. 18th Street and the United States Army Corp of Engineers’ 103,000 square-foot lease at 1650 Arch Street.
Renewals dominate. More than half (53.5%) of top major transactions were lease renewals by square footage in Q4.
Law firms remain active. Legal services represented 42.7% of major transactions by square footage during the quarter.
Availability rises, assisted by a wave of sublease space. Overall availability in Philly’s CBD increased 130 basis points to 13.7%. Sublease availability ticked up to 2.8%, as more tenants shed unused space, including 255,000 square feet of sublease space from PNC near the Philadelphia International Airport.
