The Philadelphia office market managed to overcome its shaky start from the beginning of 2017 and deliver a stronger showing, as space use efficiency and cost control methods continue to sit behind the steering wheel of leasing decisions.
Landlords wage heated battle with buildings that offer flexibility in both space and terms while asking rents continue to climb, as landlords add capital investments and positive thinking to their assets and to the city of Philadelphia, respectively. As construction prices elevate the costs of tenant improvements, throttled landlords have no choice but to push for longer term deals, generosity of design, or gracious technology allowance.
The CBD continues to attract tenants from suburban markets as it expands geographically, but this has not negatively affected the latter, as occupancy in the suburban markets gracefully rebounded during the second quarter. Camden has several major players vying for space, while Wilmington avoided a large occupancy loss as Chemours refused to budge from its location. The Lehigh Valley enjoyed a full percentage point decrease in vacancy, while activity in the region’s suburban market heated up and space tightened.
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