Market East office rental rates are soaring, leading the city in rental rate growth, but there's still some work to do before Philly catches up with other cities, according to recent reports.
Earlier this month JLL released a report that revealed Market East's rental rate increase of 12.5 percent year over year. Compare that to its larger neighbor Market West, which saw a 4.2 percent asking rate growth, and University City, where rental rates actually decreased by 4.1 percent.
A number of factors have contributed to Market East's "dramatic" surge in rental rates:
- The historic Rohm and Haas building's search for a new tenant once DOW vacates
- The ongoing Public Ledger and Independence Collection properties that are undergoing renovations
- Thylan's plans for the Bailey Building, similar to its revamp of the Biddle Building
- Brickstone's development of the Hale, Steele, and Schwartz buildings
"With so many buildings renovating to a Class A and creative standard, asking rates are pushing into the $30 range east of Broad for the first time, with some of the highest rates in former B space," the researchers wrote.
Overall, office rental rates in the first quarter of 2016 were $28.56 per square foot. That's about the same as in 2007, when the average asking rent was $25.20.
But while that may sound like a good thing, the Center City District's recent spring report says otherwise.
A clear sign of success is the premium that businesses pay to rent space. In Boston, the premium has increased by 112 percent. In DC, it's grown 75 percent.
Here in Philly? Just 4 percent.
If the city wants to continue its momentum, something will have to be done about its sluggish job growth, stark poverty rate, and education policies, CCD report noted.