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C&W 4Q16 Market Report: Demand for Green Office Space Grows in Philadelphia

| March 31, 2017 | 0 Comments

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PHILADELPHIA, March 31, 2017 – Companies in the market for LEED-certified (Leadership in Energy and Environmental Design) “green” space drove strong leasing and investment sales of LEED-certified buildings Central Business District last year, according to Cushman & Wakefield. The commercial real estate firm’s Philadelphia research team, in its fourth-quarter Office LEED MarketBeat report, projects the trend will continue through 2017 as several significant new LEED-certified buildings come online.

”Leasing activity in Metropolitan Philadelphia increased in 2016 to 949,674 square feet, a 69% increase from 2015,” said Jared Jacobs, Cushman and Wakefield research manager. “This strong demand for sustainability in office spaces generated 639,878 square feet of positive absorption and drove vacancy to a seven-year low of 10.6 percent. Direct asking rental rates for all classes rose 15.2 percent to $31.56 per square foot.”

Philadelphia, with more than 7.6 million square feet of LEED-certified office properties in its CBD and 11.5 million square feet in the broader Metro Philadelphia office market, was the 13th largest LEED market in the nation in 2016, according to the U.S. Green Building Council (USGBC). Since 2004, LEED-certification has been among the key barometers used to measure energy-efficient building practices globally. The USGBC reported a surge of activity in 2016, which saw more than 3,400 properties garner LEED designations in 1,324 cities for a record 28,582 properties as of mid-March of this year.

Notable 2016 transactions in Philadelphia included Cambridge Innovation Center signing a lease for 125,000 square feet at 3675 Market St. in University City. GSA leased 94,704 square feet at 801 Market St. in the East-of-Broad submarket of the city’s CBD. On the west side of Broad Street, Nasdaq Inc. leased 75,000 square feet at the FMC Tower at Cira Centre South and WeWork took 56,050 square feet at 1900 Market St.

In the largest investment sale of 2016, Korea Investment Corp. acquired the 862,000-square-foot LEED-Gold certified 2970 Market St. for $354 million. In the Suburban Philadelphia submarket, a joint venture between 90 North Real Estate Partners and Arzan Financial Group purchased two LEED-Platinum certified buildings totaling 320,000 square feet at 20 Moores Rd. in Malvern for $123 million. Ventas, Inc. acquired the LEED-Silver certified 141,510-square-foot office building at 3711 Market St. in University City for $91 million.

Of the almost 1.9 million square feet of construction underway at the end of 2016, three projects totaling 570,000 square feet are spurring optimism for continued strength of LEED-certified office facilities in 2017. All three are schedule to deliver by year-end. In University City, a 350,000-square-foot Class A office building at 3675 Market St. is scheduled for occupancy in the third quarter. At 34 South 11th St. in the CBD, a 176,799-square-foot renovation is set for completion in May, while a 47,400-square-foot build-to-suit for Adaptimmune Therapeutics is scheduled for completion this month at the Philadelphia Navy Yard.

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About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

 

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