Vacancies for Philadelphia office properties rose to 11.7% at the end of first quarter 2013, while Philly retail space remained unchanged from fourth quarter 2012 levels, according to a new market trend report from the Costar Group.
Net absorption in the Philly office space market reached negative 285,641 square feet in the first quarter, compared to negative 454,307 square feet in fourth quarter 2012. Vacant sublease space grew to 1,326,929 square feet for the first quarter, according to the report.
Two buildings with a total of 505,170 square feet of new Philly office space were delivered to the market in first quarter 2013. In addition, rental rates for Philadelphia office space, dropped in the first quarter to $20.87, the report said. Tenants moving into large blocks of Philadelphia office properties in 2013 include: GlaxoSmithKline, Auxilium Pharmaceuticals, and Healthcare Solutions.
On the retail side, Philadelphia commercial real estate remained essentially stable in first quarter 2013, with the vacancy rate unchanged at 6.3%, Co-Star said.
Net absorption for Philly retail space was positive 40,514 square feet. Vacant sublease space for the Philadelphia retail space market increased by 91,278 square feet. New absorption for Philly retail space in fourth quarter 2012 totaled negative 120,533 square feet, according to the report.
Four retail buildings brought a total of 59,481 square feet of Philadelphia retail space to the market in first quarter 2013, the report said. Quoted rental rates for retail space in the Philadelphia commercial real estate market ended the quarter at $13.85 per square foot per year, an increase from fourth quarter 2012 rates. Tenants moving into large blocks of Philadelphia retail space this year include: Weis Markets, Tractor Supply Company, and Goodwill.
In related news, a new State of Center City Philadelphia 2013 report released by the Center City District notes the suburbs are outpacing the city in terms of new office space available for sale or lease. Suburban Philadelphia added 10 million square feet of new office space in the past decade, while the Philadelphia office space market grew by only 1.9 million square feet over the same time period. That shift translates to a drop in the city’s share of regional office space, from 41 percent in 1993 to about 33 percent in 2012.
The report also noted that Philadelphia’s Center City population increased 9.8 percent from 2000 to 2010, making Philly the third-largest residential downtown in the country, with 175,000 residents.
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