One of the Lowest Class A, Central Business District Office Rates   

With an average Class A rent of approximately $26/square foot, Greater Philadelphia offers companies one of the lowest rental rates among the major U.S. metropolitan markets.

Source: CB Richard Ellis, August 2006

Commercial Real Estate:

• The region has a low rental rate per square foot for Class B space – approximately $22/square foot.  
• According to Grubb & Ellis, the Philadelphia region’s commercial office market remained strong during 2006, characterized by the following trends:
• Gradually declining vacancy rates reached 13.3% across the entire region in the 4th quarter of 2006.  Vacancy rates varied by submarket, ranging from just above 10% in Center City Philadelphia and southern New Jersey to 16% in the Philadelphia suburbs.
• Grubb & Ellis noted that the region-wide vacancy rate declined by about 1.2% during the year, with 14 of 17 submarkets analyzed experiencing declining vacancy rates.
• Total net absorption* was 3.6 million square feet for Class A, B, and C space.
• Lease rates, especially for Class A space, started to rise gradually in the 2nd half of the 2006 as the continued strong absorption pushed vacancy rates down, creating upward price pressure. The average increase in Class A lease rates was about $.30/square foot, based on the consensus view of the major commercial real estate firms.

Residential Real Estate:

• The region’s housing market has not been hit as hard as the US, and has fared better than many other MSAs where price declines are occurring.
• Affordable-housing and economic-development programs are available in Delaware, New Jersey and Pennsylvania (Federal Reserve Bank of Philadelphia listing of publications).

*Net absorption is the total amount of space leased less the space vacated that year. Source: Grubb & Ellis, 2006.