Could there be signs the Philadelphia Independence Hall office market is heating up?
Throughout 2015 and 2017 Independence Hall was an outlier with noticeably higher vacancies than other submarkets in and around Philadelphia’s central business district (CBD) such as Market Street West and University City. These higher vacancies were caused by move outs by both government and private sector tenants including the U.S. Navy, the GSA and Dow Chemical.
Independence Hall’s concentration of older office buildings and its distance from key center city regional rail stations are potential drawbacks from many office tenants’ perspective. However, a slew of office renovations, restaurant/bar openings and high-end residential construction throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – are now coalescing in what was once a relatively sleepy submarket.
This report on U.S. and Philadelphia commercial properties, being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate – a Philadelphia commercial real estate brokerage firm, is part of the Market Insights series from the CoStar Group research organization. These periodic reports provide a snapshot of recent real estate trends. CoStar monitors commercial real estate across 390 metro areas and analyzes the economic trends that move these markets.
Since 2014, Keystone Property Group has re-energized the ground floor of 100 Independence by bringing Independence Beer Garden — which includes outdoor seating and a gaming area — and modernist café La Colombe. One block away, MRP Realty’s newly-renovated Bourse — previously home to the nation’s first commodity exchange — is reopening this fall with an impressive array of new dining and drinking options on the ground floor. Coworking operator Make Offices also recently leased 35,000 square feet on the fifth floor of one of these key national and Philadelphia commercial real estate properties.
More than 850 new, high-end apartment units have either completed or broken ground in the Independence Hall submarket over the past five years. Parkway Corporation recently completed its Civic Design review for a proposed 278-unit apartment tower at 709 Chestnut in this key segment of the national and Philadelphia commercial real estate market. Toll Brothers is also planning an 85-unit condo development on the 700 block of Sansom Street.
These improvements to Independence Hall’s ambience and amenity offerings are beginning to bear fruit for office owners. A handful of large leases including Macquaire Investment Management, Five Below and a few coworking operators have been signed in recent years. These leases, combined with conversions of older office space into apartments, have helped bring Independence Hall’s office space availability rate — the percentage of space being marketed for lease — back in line with other Center City submarkets in 2018.
Given Independence Hall’s complete lack of new office construction, the submarket’s availability rate has nowhere to go but further down if tenants’ interest in these U.S. and Philadelphia commercial real estate listings continues to rebound. It will be interesting to see just how much more tenant interest Independence Hall can garner in the years ahead.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
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