PHILADELPHIA - SUBURBAN

YoY 12-Mo. ECONOMY

Chg Forecast
The Philadelphia Metropolitan Statistical Area’s (MSA) economy continued to post strong employment figures in the fourth quarter
of 2019, adding 26,300 jobs over the past 12 months, representing a 0.9% increase. This growth was driven by professional and
15.5% business services, education and healthcare services and leisure and hospitality sectors, each of which, respectively, represented
Vacancy Rate 31.1%, 25.9% and 17.7% of the jobs added during this period. The unemployment rate for the region fell by 20 basis points (bps) to
3.9% in the fourth quarter, while the national unemployment rate also decreased by the same 20 bps to 3.6%.
-59.0K
Net Absorption, SF SUPPLY AND DEMAND
New leasing activity in the Philadelphia suburbs ended the fourth quarter of 2019 at 641,062 square feet (sf), taking the year-to-
$26.97 date total to just under 3.2 million square feet (msf). Quarterly transaction volume was driven by two large leases in the
Conshohocken and Blue Bell/Plymouth Meeting/Fort Washington submarkets. Hamilton Lane signed a 130,000-sf build-to-suit
Asking Rent, PSF
lease at Seven Tower Bridge in Conshohocken. The construction of the 260,000-sf, 14-story office building began in November and
(Overall Gross, All Property Classes) is scheduled to be completed in the winter of 2020. Upon completion, the Hamilton Lane will relocate about 260 of its employees to
the new headquarters from three office buildings in Bala Cynwyd. In Plymouth Meeting, PayPal signed a 102,331-sf lease at
Metroplex One. The online payments giant leased the space in order to consolidate its small-business lending arm with another
subsidiary under one roof. The move is scheduled for late 2020 and the new space will house more than 150 of the company's
ECONOMIC INDICATORS Q4 2019 employees.
Overall absorption for the quarter was negative at -58,978 sf, pushing year-to-date absorption to negative -841,117 sf. The negative
YoY 12-Mo. absorption was driven primarily by a 203,000-sf move-out of Toll Brothers at 250 Gibraltar Road in Horsham, PA. The home
Chg Forecast
construction company relocated about 900 employees into new, smaller corporate headquarters at 1100 Virginia Drive in Fort
2.98M Washington, PA. Fourth quarter negative absorption pushed overall vacancy rate to 15.5%, up 190 bps from year-end 2018.
Philadelphia
Employment PRICING
Suburban direct average gross asking rental rates for all classes ended the fourth quarter 2019 at $27.04 per square foot (psf), a
3.9% 2.3% increase year-over-year. This rise in asking rates was driven by Class A rents, which have climbed by around 12.8% over
Philadelphia the past five years to $28.97 psf. Class B rents also had a strong five-year increase, up by more than 6.9% to $23.55 psf. Expect
Unemployment Rate this trend to continue in 2020, as tenants are willing to pay more for premium space near mass-transit accessible locations with
modern building amenities.

3.6% SPACE DEMAND / DELIVERIES OVERALL VACANCY & ASKING RENT

U.S.
Unemployment Rate
PHILADELPHIA - SUBURBAN
MARKET STATISTICS
INVENTORY SUBLET DIRECT OVERALL CURRENT QTR YTD OVERALL YTD LEASING UNDER OVERALL AVG OVERALL AVG
SUBMARKET (SF) VACANT VACANT VACANCY OVERALL NET NET ABSORPTION ACTIVITY CNSTR ASKING RENT ASKING RENT
(SF) (SF) RATE ABSORPTION (SF) (SF) (SF)** (SF) (ALL CLASSES)* (CLASS A)*
East of Broad 12,668,511 66,807 1,349,735 11.2% -6,372 -54,047 421,889 0 $29.01 $31.47
West of Broad 28,917,954 229,370 2,458,615 9.3% 70,498 100,838 1,349,958 0 $32.07 $33.40
CBD 41,586,465 296,177 3,808,350 9.9% 64,126 46,791 1,771,847 0 $31.12 $32.92
Naval Yard 827,788 0 28,346 3.4% 14,560 25,685 150,560 231,000 $40.68 $40.68
University City 5,688,632 34,631 391,253 7.5% 17,330 162,817 694,039 0 $42.59 $43.00
Bala Cynwyd 2,718,384 0 247,456 9.1% -21,526 3,046 134,020 0 $33.94 $34.69
Southern Bucks County 6,322,779 25,357 1,284,580 20.7% 97,908 -125,746 347,093 20,000 $24.69 $27.18
Southern Route 202 Corridor 5,944,423 12,412 694,039 11.9% -11,778 19,243 294,269 0 $25.28 $26.24
Delaware County 4,159,028 25,290 423,007 10.8% 36,097 -48,208 168,139 378,000 $27.15 $29.02
Blue Bell/Ply. Mtg./Ft. Wsh. 12,102,610 105,414 2,529,722 21.8% 205,122 -91,267 631,446 0 $26.02 $26.56
Main Line 3,568,028 6,739 296,540 8.5% 16,016 108,560 265,285 0 $36.35 $37.31
Conshohocken 3,547,486 51,840 359,896 11.6% 19,409 -52,439 275,686 687,333 $36.87 $37.23
Horsham/Willow Grove/Jenkt. 5,277,243 73,138 1,070,230 21.7% -242,605 -416,004 137,331 0 $23.68 $25.13
King of Prussia/Valley Forge 18,071,320 246,256 2,127,460 13.1% -157,621 -238,302 906,233 0 $27.63 $29.23
SUBURBAN PHILADELPHIA 61,711,301 546,446 9,032,930 15.5% -58,978 -841,117 3,159,502 1,085,333 $26.97 $28.80
Burlington County 7,853,472 5,909 1,264,823 16.2% -10,411 -200,309 380,709 0 $23.47 $26.61
Camden County 6,303,713 45,030 857,448 14.3% -4,326 -114,268 210,784 0 $20.25 $23.24
SOUTHERN NEW JERSEY 14,157,185 50,939 2,122,271 15.4% -14,737 -314,577 591,493 0 $21.76 $26.11
New Castle-Suburban 9,509,660 87,906 1,325,449 14.9% -34,767 -84,413 866,690 0 $23.76 $24.36
Wilmington-CBD 7,117,093 23,127 1,800,009 25.6% -79,813 -711,629 137,071 0 $26.73 $27.32
NEW CASTLE CTY-DE TOTAL 16,626,753 111,033 3,125,458 19.5% -114,580 -796,042 1,003,761 0 $25.40 $26.29
Lehigh & North Hamp. Counties 7,555,435 24,684 1,079,261 14.6% -89,367 132,900 211,011 0 $20.01 $22.86
PHILADELPHIA TOTALS*** 134,081,704 1,004,595 18,089,009 14.2% -124,169 -1,904,945 6,526,603 1,085,333 $27.10 $29.37
Rental rates reflect gross asking $pfs/year **Does not include renewals / ***Lehigh & North Hampton Counties, Naval Yard and University City submarkets are not included within Suburban & Philadelphia MSA total

KEY LEASE TRANSACTIONS Q4 2019

PROPERTY SUBMARKET TENANT SF TYPE
VINCENT PLANQUE
Senior Analyst
171 Washington Street Conshohocken Hamilton Lane 130,000 New
+1 215 963 4125
4000 Chemical Road Blue Bell/Ply. Mtg./Ft. Wash. PayPal, Inc. 102,331 New vincent.planque@cushwake.com
1100 East Hector Street Conshohocken Norman Spencer McKernan, Inc. 45,913 New

2080 Cabot Boulevard West Southern Bucks County Amplify Health 41,017 New
*Renewals not included in leasing statistics
A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION
©2020 Cushman & Wakefield. All rights reserved. The information
KEY SALES TRANSACTIONS Q4 2019 contained within this report is gathered from multiple sources believed to
PROPERTY SUBMARKET SELLER / BUYER SF PRICE / $ PSF be reliable. The information may contain errors or omissions and is
presented without any warranty or representations as to its accuracy.
Equus Capital Partners / Bridge
Bay Colony Corporate Center Portfolio Sale King of Prussia/Valley Forge 247,817 $58.2M / $235
Investment Group