Regional Summaries

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Philadelphia, PA

The 217,000-unit metro Philadelphia apartment market as a whole shows few ill effects from a development boom that is peaking in 2017. Vacancy is stable, and asking rents are rising sharply, though effective rents are rising more slowly. The vacancy rate in the Philadelphia area apartment market ended the third quarter of 2017 at just 3.8%, according to Reis, up 10 basis points from the prior quarter and up just 20 from a year earlier. In the third quarter, the average asking rent increased 1.5% to $1,284 per month, and the average effective rent rose 1.4% to $1,241 per month. Prior weakness in the effective average meant that while the asking average is up 4.1% year-over-year, the effective average is up just 2.1%—still more than the 1.7% increase in household average income, according to Moody’s VIEW APARTMENT LISTINGS >
Demand remains exceptionally strong in both the 250-million-square-foot metro Philadelphia warehouse/distribution market and the 48-million-square-foot Flex/R&D market, and development cannot keep pace. Rent gains are accelerating, particularly in more central locations, as businesses even consider locating in old central cities. Reis reports a 7.1% vacancy rate for warehouse/distribution space in metro Philadelphia for October 2017, down 80 basis points from mid-year and down 100 from the end of 2016. The third quarter rate was also 7.1%. Metro Philadelphia warehouse/distribution rents are rising faster than overall inflation. As of October, the average asking rent was up 3.0% year-to-date to $4.80 psf, with the average effective rent up 3.2% to $4.44 psf, including gains of 0.4% and 0.5% for October alone. The Flex/R&D vacancy rate in October was just 9.3% in Philadelphia, down 40 basis points from mid-year and down 80 year-to-date. The third quarter rate was also 9.3%. Metro Philadelphia’s Flex/R&D rents are rising more slowly, with the average asking rent up 1.4% and the average effective rent up 1.6% year to-date through October, to $7.56 psf and $6.93 psf. VIEW INDUSTRIAL LISTINGS >
The 111.2-million-square-foot metro Philadelphia general purpose, multi-tenant office market has an 11.8% vacancy rate in the third quarter of 2017, essentially unchanged from the prior quarter but up 30 basis points from a year earlier. In the third quarter of 2017, both the average asking rent and the average effective rent rose 0.4% to $27.03 psf and $22.22 psf, respectively. The year-over-year gains are a modest 1.2% and 1.3%, respectively, down from the gains of 2.9% asking and 3.1% effective in 2016 that had been the highest since the recession. VIEW OFFICE LISTINGS >
Metro Philadelphia’s 62.5-million-square-foot community-neighborhood shopping center market has remained stable despite adding space in 2017, according to the latest data from Reis, with elevated vacancy accompanied by ongoing moderate rent gains. The vacancy rate was 10.1% in the third quarter of 2017, up 10 basis points for the quarter but down 30 year-over-year. For community-neighborhood center rents, the third quarter saw the average asking rent increase 0.3% to $21.12 psf and the average effective rent rise 0.4% to $18.81 psf. The year-over-year gains were 2.1% and 2.2%, respectively. VIEW RETAIL LISTINGS >

Source: Data provided by Reis, inc.

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