Additional Office Investment Opportunities Expected to Arise in Philadelphia

PHILADELPHIA, PA— A significant reduction in development activity within Center City will lead to more stable operations in the near term, while some outlying areas will register moderating fundamentals due to weak employment in the professional and business services sector, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Since the opening of the Comcast Center last summer, there have been only a handful of notable completions in the CBD, and few are expected during the next 12 to 18 months.

(The historic Liberty Bell, top left photo)

“Activity within Philadelphia’s office investment market will remain modest in the near term, although velocity may pick up toward the end of 2009 as distressed assets reach the market,” says Spencer Yablon, (middle right photo) regional manager of the Philadelphia office of Marcus & Millichap.

Following are some of the most significant aspects of the Philadelphia Office Research Report:

· Continued weakness in the professional and business services and financial activities sectors will contribute to the loss of 58,000 jobs this year, a 2.1 percent decrease. In 2008, 46,100 positions were trimmed. Office-using employers will cut 23,000 workers in 2009, after 24,400 jobs were shed last year.

· Approximately 400,000 square feet of new office space is expected to come online in the Philadelphia market this year, compared with almost 1.7 million square feet in 2008. Completions have averaged 1.7 million square feet annually over the past five years.

· Declining office employment and reduced leasing activity will cause overall metro vacancy to trend higher through year end. In 2009, vacancy is forecast to rise 230 basis points to 14.4 percent. Last year, vacancy increased 80 basis points.

· This year, asking rents are forecast to drop 4 percent to $23.07 per square foot, while effective rents will fall 4.5 percent to $19.23 per square foot. In 2008, asking rents increased 3.8 percent, and effective rents pushed up 1.1 percent.

For a copy of the complete Philadelphia Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716