According to SSH Real Estate‘s 2013 Greater Philadelphia Mid-Year Office Market Report and Outlook, the Philly real estate market is on the up and up. You can thank this conclusion to a sky-high apartment boom, low commercial vacancy rates, and stable rental rates. Below are some of the report’s highlights, focusing more on Center City:
In commercial property news:
- Center City commercial rents remained relatively flat in the past six months, but Class B rates are expected to rise through 2014 due to decreasing supply.
- With only 15 contiguous spaces with more than 50,000 square feet, the limited supply of large blocks of space may lead to the construction of a new office building.
- The investment sales market in Center City continues to gain momentum. Currently on the market are five buildings that comprise 2.5 million square feet.
In submarket news:
- In a new trend among tech firms, more companies are moving to Center City in an effort to attract top young talent, as demonstrated in Brand.com’s relocation from West Chester to Center City.
In the residential sector:
- The apartment boom continues with high demand for rental units in Center City. There are currently 22 new apartment projects in the works, which will add 4,500 new units by 2015, if completed.
- The office-to-apartment conversion trend is not slowing down as evidenced by new projects, such as Alterra Properties’ plan to convert 185 apartments.
- Despite the increase in residential inventory, vacancy rates are expected to remain low. This is thanks to a pent up demand to trade up from older units and an improved economy, which is leading to more people moving out of parents’ homes and a reduced need for roommates.
Let’s hope all of those 4,500 units come to fruition so Philly can remain the third largest residential population among Central Business Districts in the U.S. And if this growth keeps going, and perhaps if we get a little more comfortable with some height in low places…here we come, Chicago Loop.
Image by Duncan Pearson from Fine Art America