The Brother City is not interested in commercial real estate.
Since 2019, office space occupied in Greater Philadelphia has decreased by nearly 10 million square feet, The Philadelphia Inquirer reports, citing data from CBRE. Hybrid work models and remote work have entered the market significantly.
“The downtown market is doing really well right now,” Nick Gersbach, senior vice president of CBRE’s Philadelphia office, told the Inquirer. “I’ve been in this market for 23 years, and I’ve never seen But it’s shrinking at this rate… We have three to five years to start with a steady and slow recovery. … People aren’t going back to the office.
Worryingly, the current situation is not a slow recovery, but a genuine new normal, leaving the office sector grappling with how to deal with the losses.
The vacancy rate in downtown Philadelphia was just above 10% at the end of the first quarter of this year, while the pressure on luxury buildings eased.
“Philadelphia’s suburbs and core still have a core set of buildings [city] locations, we’ve started to see signs of recovery in that trophy and very specific submarkets,” Joe Gibson, associate director of research at CBRE, told the Enquirer. Amenities and quality spaces that bring people back to the office. “
Class B buildings have been hit harder.
Philadelphia is not alone, with cities like San Francisco, Los Angeles, Chicago and Washington, D.C. all struggling with low office occupancy rates.
For example, about 2.2 million square feet of office leases in Los Angeles Signed in the first quarter of this year – A drop of 37% compared to the last quarter of 2022 and about 40% year-on-year, according to a report by CB Richard Ellis.
at the same time, San Francisco office vacancy rate soars to 29.5% In the first quarter, it has risen by nearly 2% since the end of last year and nearly 10% year-on-year. San Francisco Business Times reportsciting data from brokerage CB Richard Ellis.
While Philadelphia may not be attractive to work in an office, people still want to live there.
Gersbach told the Enquirer: “This weird phenomenon of residential construction in Philadelphia is continuing at a strong pace, people want to live in the city, they want to play in the city, they want to eat in the city because restaurants and retail Businesses are re-emerging.” “But for whatever reason, don’t want to go to an office in the city.”
— Ted Glazer
