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.