Sid's Office Outlook
Center City's office market will continue positive absorption in 2014, predicts Newmark Grubb Knight Frank executive managing director Sid Smith. Vacancy in the CBD fell to 13.6% in 2013 and should fall below 13% by year’s end, in line with national trends. The factors behind Philly's solid office fundamentals? The residential renaissance, for one, which is attracting interest of office tenants and landlords alike. And for the first time, Sid counts more investors outside Philly than in. (It's a cash invasion!) They're drawn by the expansion of Cira Centre, strengthening Center City's connections with University City, and the recent Comcast ITC announcement, which only builds on an already optimistic outlook.
Sid says investors have shown “tremendous interest” in One Franklin Plaza, the 600k SF former home to GlaxoSmithKline. The building, which NGKF Capital Markets began marketing in November, has flexible zoning and design to make for a practical subdividing of its 24 floors, and it’s conceivable that half could go residential, he says. Besides Comcast—whose planned startup incubator he thinks could give a boost to the local tech sector—Sid doesn’t anticipate another big-anchor-tenant announcement this year for a new building, although a pre-lease with two or three tenants cobbled together isn't out of the question.
