Phila office vacancies highest since '04 as Sunoco, Arkema leave
Studley reports flat rents, rising vacancies, more giveaways
Philadelphia's Center City office vacancy rate has risen to 15%, highest since 2004, the Studley agency's Philadelphia branch manager, Hether Smith, says in a new report. The rate was under 10% and investors were talking about new buildings before the economy stalled two years ago. Supply's been flat.
Studley blames the most recent spike on the decline of Philadelphia's chemical industry, including Arkema's recent decision to leave town and consolidate local operations in King of Prussia, and Sunoco's plans to cut office space as it sells off businesses and refineries. Dow Chemical has also cut office use at the landmark former Rohm and Haas building on Independence Mall since it bought the company last year.
Center City office rents were flat at around $26/square foot for Class A towers, $21 for older Class B space. But landlord giveaways are on the rise, with tenants demanding around five months' free rent (less in the suburbs) plus more in free improvements.
Update: Brandywine Realty Trust confirms that Comcast has leased the 42d and 43d floors of its newly-acquired former Bell Atlantic tower, Philly's home to Comcast rival Verizon. 42,000 square feet. Just across the street from Comcast HQ. - David Binswanger, who represented Comcast, says the space was sub-let by former occupant Aramark, and expires, like all the leases in the building, in 2012.