Philadelphia’s commercial real estate market is managing to stay afloat throughout the uncertainty of the current economy.
Several third-quarter office research reports from real estate firms have found that asking rent has remained steady in the city while vacancy has risen.
According to Savills, transactions fell by 48% quarter-to-quarter and many of leases that have been signed have come from renewals.
Although there has been a clear dip in leasing activity, asking rents have remained stagnant due to landlords’ apprehension of presenting the market as declining.
Kevin Maloney, senior vice president of CBRE, says that owners will likely make tenant improvements so occupiers can spend less before they actually adjust their rent.
One of these improvements includes landlords offering more flexibility on the length of their leases, particularly as receiving economic relief from the government becomes increasingly far-fetched.
Now, large companies are looking to adopt flexible offices in suburban areas in order to bring workers back into the workspace, without using public transit.
“Anecdotally, my brokers have reported that young professionals do not want to work from home, because starting a career means building a network,” said Joseph Gibson CBRE Senior Field Research Manager. “And how do you build a network via Zoom? So workers will want to come back to the office, and there’s no longer the apocalyptic fear that there was in spring.”