PhillyDeals: Few Tenants Moving into Philadelphia's Center City offices
August 19, 2010
By Joseph N. DiStefano

Philadelphia's Center City office vacancy rate has topped 15 percent, the worst since 2004, according to data collected by Studley Inc., the national tenant-rep firm. ...

... "There's been a period of stagnation," with few tenants moving in as the economy slows, Greg Soffian, the Studley agency's Philadelphia branch manager, told me.

... Soffian says Brandywine Realty Trust's $129 million purchase of the former Bell Atlantic building in a stock deal with Blackstone Group L.P. earlier this month "changes the dynamics of the market." Though national real estate values had fallen about 40 percent, building owners had mostly resisted cutting deals at lower prices, in hopes the market would recover. The surrender could spark more low-price deals - enabling buyers to cut rents and still turn a profit.

Soffian expects Brandywine will try to keep rents above $30 per square foot on the upper floors, but may accept less if it can rent larger blocks of space on the lower floors to big law firms looking for high-rise space as their old leases expire. ...

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