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Market Report

Philadelphia Office Investment Forecast

2020 Outlook

Tenants Search Outward for Large Footprints; Investors Seeking Deals in High-Vacancy Suburbs

 

Strong pre-leasing, constrained core development keep vacancy on downward trend. Fundamentals are sturdy in Philadelphia heading into the new decade. In 2020, delivery volume will fall below 1.5 million square feet, just two years after peaking at nearly double that volume in 2018. Of the space coming to market, over 85 percent is pre-leased, and economic drivers are on solid footing with healthcare and life science firms rapidly expanding and absorbing office space. This will support a drop in the vacancy rate to a cycle-low level in 2020. The majority of this year’s deliverables will be in the suburbs, with Conshohocken receiving nearly two-thirds of the total space. The largest building under construction here is the 427,000-square-foot Sora West project, which is fully pre-leased. Amerisource Bergen Corporation will anchor the building and take on 93 percent of the rentable space to house its new headquarters. Less than one mile away, the 260,000-sqaure-foot Seven Tower Bridge development is in the final stages. Financial firm Hamilton Lane has pre-leased roughly half of the building’s rentable space. Organizations pursuing larger footprints will continue to spill out into suburbs as availability in Center City and University City remains tight, with little relief coming in the pipeline.

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