Q4 2023: Philadelphia Office Market Report

Philadelphia’s office market showed sustained strength in 2024, marking its first positive annual net absorption since mid-2022. A slowdown in lease downsizings and moveouts suggests easing vacancy pressures, though 8 million SF of leases that are set to expire within 18 months could push vacancies gradually higher. Despite these challenges, Philadelphia’s 14.3 percent availability rate remains below the national average of 16.2 percent, ranking as the fourth lowest among the 20 largest U.S. office markets. Philadelphia continues to provide stability, opportunity and value for occupiers. Although companies are still returning office space, the pace seems to be decelerating, with annual absorption showing a notable improvement compared to the five-year average of -1.3 million SF. Sublet availability has also declined slightly, from 16 percent to 15 percent, signaling signs of stabilization. New office developments have pushed availability to 20.9 percent, even as average lease sizes for these
top-tier properties have shrunk by 20 percent compared to 2017-2019. However, availability in this segment is expected to tighten as market confidence rebounds, funding activity increases, and demand from the life sciences sector grows.

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