Office development in the region that includes South Jersey is expected to turn around by next year as multiple new developments will break ground by the end of 2020, according to CBRE‘s third quarter 2019 office market report.
The office development pipeline has been under 1 million square feet for the past two years, CBRE said, but forecasts predict it will hit 2.5 million square feet by the end of 2020.
Rent growth was modest and driven by asking rate increases in downtown Philadelphia and the suburbs. The suburbs saw a $0.43 increase quarter-over-quarter, CBRE found.
“Tenants in the Philadelphia region (which includes South Jersey) continue to invest in their office space as a tool to recruit and retain the best talent in today’s competitive labor market,” Les Haggett, first vice president, CBRE, said. “This dynamic has fueled a competitive real estate environment, with companies starting the search for office space much sooner as desirable options are limited. This continues to push rental rates to new historical highs and drive the need for new office development to meet the demand for today’s new workplace.”
Overall, the market showed signs of healthy interest from investors as sales volumes were up to near record highs.