NORTHEAST SNAPSHOT, JANUARY 2006
Philadelphia Office Market
Overall, the Philadelphia office market has seen a rise in the conversion of Class B and Class C office space into condominiums, thus reducing the supply of available office space throughout the city. Currently, the rental rates for Class A space range from $23 per square foot to $25 per square foot. The overall vacancy rate for the Philadelphia office sector currently stands at 13.6 percent.
Seligsohn Soens Hess
Several new office developments adorn the Philadelphia office market's landscape. The Cira Centre officially opened recently at 30th Street Station; the property encompasses 727,000 square feet and is a signature Class A office property in the market. In addition, Comcast's new corporate headquarters currently is under construction at 17th Street and John F. Kennedy Boulevard. The tower features a total of 1.2 million square feet, making it a significant addition to the total product throughout the city.
Over the past 3 years, an increasing number of Center City office buildings have been converted to condominiums, as the conversion trend from office to residential has been widespread across Philadelphia. Buildings of note that have undergone this transformation include 225 South 15th Street, 1515 Locust Street, 1500 Chestnut Street, 1930 Chestnut Street, 210 West Washington Square, 1401 Walnut Street and the Packard Building, which is located at the corner of 15th and Chestnut streets. In addition to these buildings that are already converted, more buildings are slated to undergo this process in the near future. Directly affected by this trend, Class B and Class C office space is being depleted; therefore, rental rates for the remaining office properties of this persuasion are being pushed higher.
In the new building at 17th Street and John F. Kennedy Boulevard, Comcast has leased 872,000 square feet of space, adding to its occupancy in the Philadelphia market; every several months the company has been taking more space. In addition, several other large office leases have been signed throughout the office sector: Blank Rome Comisky & McCauley has renewed its lease at One Logan Square, continuing its occupation of 220,000 square feet; ExcelleRx Inc. has signed a lease for 140,000 square feet at Three Parkway; and at 901 Market Street, Health Partners has agreed to occupy 129,442 square feet.
The Market Street — West submarket should continue to have plenty of space available for the foreseeable future. Rental rates in this submarket should stay at current levels.
— Jeff Seligsohn is a principal at Seligsohn Soens Hess in Philadelphia.
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