Office Market Review
Brandywine Realty Trust
has a significant presence
in the Mid-Atlantic. Its
assets in the Philadelphia
CBD show the greatest
promise; with the exception of 3 Logan Square
(pictured), its local portfolio
is approximately 98%
A recovery is
under way, but
there’s a different
story in virtually
every market you
By John Jordan
Building owners and commercial brokers agree that the office market is, at the
moment, fragmented into the “haves” and “have nots.” The economic recovery, now featuring
job creation as a byproduct of higher corporate profits, is fueling improvement in market
conditions in many sections of the country.
A select few markets are faring better than others, and increased tenant demand is starting
to place downward pressure on vacancy rates, which could cause office rents to increase
sooner rather than later. Yet while commercial brokerage firms are mostly upbeat about leasing activity registered in the first quarter, they offer differing forecasts as to the recovery’s
sustainability for the remainder of 2011.
CBRE Econometric Advisors reported that the national office vacancy rate declined 10
basis points in the first quarter of 2011 to 16.4%. Downtown office vacancies also fell by 10
basis points, to 13.2% in the first quarter, fueled in part by activity in some of the larger CBD
markets such as New York City, Los Angeles, Chicago and Dallas.
In its statistical analysis, Cushman & Wakefield stated that first-quarter 2011 office leasing
activity reached a six-year high. The brokerage firm reported that leasing in the nation’s CBDs
totaled 18. 2 million square feet in the first three months of this year, a nearly 32% increase
from the 13. 8 million square feet of transactions recorded in the first quarter of 2010. The last
time CBD leasing activity reached such a high level was 2005, when 20. 6 million square feet of
deals took place.