Philadelphia Office Market Analysis
Downtown Philadelphia -- Analysis of the Office Market of the Central Business District
Recently, the city of Philadelphia has garnered considerable national attention in the national media. This is partly due to the fact that the Philadelphia schooled and owned colt named 'Smarty Jones' has dazzled the eyes of racetrack spectators and betters all over the nation. This prospective winner of racings illustrious Triple Crown makes the old city of Philadelphia as a whole seem, if not glamorous, then at least a city that is showing a newly marketable face to the nation.
Philadelphia resurgence in the Central City Business District has been predicted since the early 1990's. But, from an office owner's real estate oriented perspective and vantage 2004, is Philadelphia a 'good bet'? What about specifically regarding office space targeted to that of the horary perspective of the legal profession? Would the purchase of a small, Class A office property that would hold a law office and/or some other prospective office tenants be a wise real estate investment? Does the market data back up the status of rhetoric in the popular media regarding the city's central business district, or 'CBD'? "Philadelphia has always been an underrated market," said Arthur Fefferman, president of New York-based AFC Realty Capital, predicting the city's resurgence. Does this analysis of the previous decade prove true? (Sinderman, 1996)
Local economy -- Does Philadelphia have a healthy economy, what does the future hold for the city?
(CCPA, 2004) As it was "never a high-tech Mecca," the city's office market avoided a huge upsurge in vacancies following "the dot-com meltdown." Activity in the hotel sector kept the business district afloat, as more and poorer families turned to local travel, and travel outside of New York City, after 2001. (Walsh & Brickley, 2003)
However, there is still the matter of Philadelphia's sluggish regional economy. Its unemployment is still 1.3% above the national average. But office rents in the third quarter of 2002 averaged $850, up from $820 in the third quarter of 2001. Also, 43% of all city jobs are located in Center City. Almost half of all private sector salaries are paid in this area of the city. While health care and education are the largest employment sectors for the city, with 26% of all city jobs, Center City is dominated by office sector jobs, with 31% of the total. Center City is home to 12% of the region's jobs, and 33% of the region's office inventory because of its proximity to transportation routes, and 80% of the city's commercial space are in Center City. (Center City, 2003)
Competitive supply - How large is the existing market, are there new projects either under construction or in the planning stages?
There is the economic threat, region-wide, of the expiration of a large number of major office leases in the coming years. This will affect thousands…
