Many companies in and around Philadelphia are using less office space as hybrid work has come to dominate white-collar professions.Just past the midway point of 2023, Philadelphia’s office market is caught in limbo, and stakeholders are figuring out how to adapt to a post-pandemic normal with few precedents.
“When you get to 20% vacancy, that’s significant, and that takes a long time to get it down to a level where you have a strong market,” said Tom Weitzel, managing director with JLL in Philadelphia. “Buildings really need to be at about 12% vacancy to be considered healthy … It’s going to be pretty ugly.”Other market analysts try to highlight the positive side. For those seeking to buy office buildings, for their current use or something else, valuations could drop soon.
“Both in downtown Philadelphia and in the suburbs, trophy office buildings posted significantly lower vacancy rates than the market at large, standing at just over 13% as compared to 25%,” reported the real estate services firm CBRE in its second quarter office market analysis. the owners of three Center City buildings — Centre Square, the Wanamaker, and One South Broad — together owe
“A lot of companies are still kind of figuring out their strategy, but the reality today is that their space is being underutilized,” said Haggett of CBRE. “Marketing your space for sublease is a relatively low risk decision by a company; it doesn’t really cost you anything. So let’s see what happens and test the market, as we figure out our strategy.”, according to CBRE, and Philadelphia is no exception.