Center City winter rents flat again, CBRE says
Class A office rents offered by Center City landlords dipped 4 cents during the first quarter, to $27.24 per square foot at March 31, CB Richard Ellis said in a report. The winter’s pause in what had been a rising market foll
Class A office rents offered by Center City landlords dipped 4 cents during the first quarter, to $27.24 per square foot at March 31, CB Richard Ellis said in a report.
The winter’s pause in what had been a rising market follows a recent seasonal pattern. Rates also dipped in the first quarter of 2006 and the second quarter of 2005 before rising later in both years, said Michael L. Compton, research manager at the firm’s Phialdelphia office.
CBRE blamed the drop, not on “the continuing downward spiral of the national economy,” which it said hasn’t hit Philadelphia, but on a “significant” fall in University City asking rents after Cira Center became fully leased. Cira had been asking up to $45 a square foot, Compton said.
By contrast, rents have been rising in the city’s old financial and publishing district, near Independence Hall, Compton said. Higher rents and occupancy have been reported for the Curtis and Public Ledger buildings by developer Joseph Grasso, whose firm, Walnut Street Capital, is a partner with Citigroup Properties in both buildings.
Class A office vacancy totalled 8.99 percent in downtown Philadelphia, from 9.01 percent in the previous quarter, Compton said. If vacancies stay below 10 percent, CBRE predicts rents will rise and net new office construction will be more attractive. New office towers have been scarce downtown since the 1980s, except for the Comcast and Cira towers.
Vacancies are higher in the suburbs, including northern Delaware, where the DuPont Co. and Bank of America have been emptying space in central Wilmington. Also, “for the first time in a few years, there are currently no new office buildings under construction” in South Jersey, the report said.
Vacancies in the Pennsylvania suburbs “will linger around 13 percent until recently-built speculative projects like 1000 Continental Drive and 211 South Gulph Road” in King of Prussia “find tenants to fill their large vacancies”, the report added. (The Gulph Road property is a rehab, not newly-built.)
O’Neill Properties spokeswoman Rosemarie Console said her firm was negotiating leases with two companies that could fill the 102,000 square feet O'Neill owns at 211 S. Gulph. Agents at landlord rep GVA Smith Mack and the owner, an affiliate of BPG Properties, had no immediate comment on propsects for 1000 Continental. UPDATE: "We're in active negotiation" with several large tenants for 1000 Continental, said BPG Vice President of Leasing Neil Gallagher.