2012 Global Market report - NAI Global

Philadelphia, Pennsylvania
Philadelphia Suburbs, Pennsylvania
Contact
NAI Geis Realty
Group
+1 215 568 7222
NAI Mertz
+1 215 221 1100
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
5,987,739
6,086,531
3,104,793
$83,835
On the heels of a strong Q4 of 2010, the market was poised
for a respectable rebound in 2011. The year showed early
promise but continued national economic weakness and
Washington’s dysfunction resulted in a lackluster market.
Rates barely moved, absorption was positive in the CBD but
vacancy is still over 14%. The market activity could be
described as “musical chairs”, with the healthcare sector once
again leading the way with real expansion.
Notable transactions include: Children’s Hospital of
Pennsylvania renewed and expanded a lease at 100 Penn
Square West for 252,000 SF; Janney Montgomery Scott
relocated to Three Logan Square leasing 125,000 SF
and Glaxo Smith Kline is moving from the CBD to the
Philadelphia Navy Yard for a 205,000 SF build to suit.
Philadelphia continues to receive interest on a global basis as
heavy manufacturing, hi-tech, drug and alternative energy
companies seek labor, power, rail, port and economic
incentives offered specifically within The Philadelphia Naval
Yard and other industrial sites under the control of the
Philadelphia Industrial Development Corporation. The Naval
Yard was designated a KOIZ adding 1200 acres of industrially
zoned land with port and rail facilities to the 44,000 acres of
developable land designated within Pennsylvania's KOZs
throughout the state. Notable transactions include the sale
of 150 acres for Teva Pharmaceutical’s 1,000,000 SF
distribution center; completion of the 700,000 SF Produce
Terminal and Car Vision’s lease of 736,640 SF. Liberty
Property Trust is building two 51,000 SF flex buildings within
the former Navy Yard on speculation.
Retail has experienced little change and remained resilient in
2011. Food related business openings continue to lead the
market. In Center City, several national retailers and local
entrepreneurs have turned vacant locations into successful
business locations. Notable transactions include the purchase
of the 70,000+ SF former Please Touch Museum on
Race Street in Center City. In Northeast Philadelphia, Giant
Supermarket, LA Fitness and Bottom Dollar Supermarket have
recently opened.
Contact
NAI Geis Realty
Group
+1 215 568 7222
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
1,942,193
2,014,910
1,060,872
$106,424
A slow recovery continues in the Philadelphia suburban
office market where a slight positive absorption is
encouraging. The recovery, however, seems isolated to just
a few submarkets. The overall vacancy rate is near 20%,
but markets such as Conshohocken, Plymouth Meeting
Main Line and Jenkintown have experienced positive
absorption and increased asking rates.
Sale activity is significantly down as most of the action
seems to be owners involved in “workouts”, or properties
being taken over by special servicers looking to stabilize
their assets. Due to a lack of speculative construction, large
blocks of space (50,000 SF+) are difficult to find and could
create potential build to suite activity. Significant lease
activity includes Brokerage Concepts relocated to Lakeside
I in Blue Bell for 43,000 SF, Larsen Allen LLP relocated to
610 Germantown Pike in Plymouth Meeting for 28,000 SF,
NRC relocated to 2100 Renaissance Boulevard in King of
Prussia for 80,000 SF and PJM Interconnection leased
2750 Monroe Boulevard in Valley Forge for 105,846 SF.
The Philadelphia industrial suburban market is a diversified
and balanced economy and remains active with a decrease
of vacancy to 6%. Rates are holding steady and large blocks
of space are hard to find. Significant activity includes GE
Infrastructure leased 33,000 SF in Bensalem, Estee Lauder
leased 241,000 SF in Bristol and National Fulfillment
Services leased 125,000 SF in Delaware County.
The retail market is moving in the right direction, but some
of the players are changing. big box users such as Best
Buy, Staples and Target are becoming more conservative;
Wegmans and Walmart continue to grow and open new
locations. Traditionally strong retail centers such as King of
Prussia, Cherry Hill and Oxford Valley are now experiencing
big box vacancies and supermarket closings have increased
due to over saturation and Wegmans growth in the market.
Median
Household Income
$62,375
Median
Household Income
$81,028
Total Population
Median Age
37
Total Population
Median Age
39
Philadelphia At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
N/A
24.00
17.00
27.00
25.00
16.00
$
$
$
$
$
N/A
32.00
23.00
35.00
33.00
23.00
N/A
$ 27.00
$ 20.00
$ 31.00
$ 29.00
$ 19.00
N/A
12.00%
11.00%
25.00%
17.00%
18.50%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
1.50
2.25
5.50
$
$
$
4.50
5.00
8.50
$
$
$
3.00
3.25
6.00
14.00%
8.00%
10.00%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
18.00
12.00
18.00
N/A
$
$
$
80.00
20.00
38.00
N/A
$ 35.00
$ 16.00
$ 27.00
N/A
9.00%
11.00%
10.00%
N/A
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
N/A
80,000.00
30,000.00
90,000.00
400,000.00
N/A
$
$
$
$
N/A
400,000.00
200,000.00
750,000.00
2,000,000.00
N/A
Philadelphia Suburbs At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
N/A
N/A
N/A
$ 27.00
$ 25.00
$ 16.00
N/A
N/A
N/A
$ 35.00
$ 33.00
$ 23.00
N/A
N/A
N/A
$ 31.00
$ 29.00
$ 19.00
N/A
N/A
N/A
25.00%
17.00%
18.50%
Bulk Warehouse
Manufacturing
$
$
2.50
2.75
$
$
4.75
5.00
$
$
4.00
3.10
8.00%
7.00%
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$ 7.00
N/A
N/A
N/A
N/A
$ 12.00
N/A
N/A
N/A
N/A
$ 8.50
N/A
N/A
N/A
N/A
8.00%
N/A
N/A
N/A
N/A
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
N/A
80,000.00
30,000.00
90,000.00
400,000.00
N/A
$
$
$
$
N/A
400,000.00
200,000.00
750,000.00
2,000,000.00
N/A
2012 Global Market Report n www.naiglobal.com 130