Xavier Becerra paid a visit to US Sen. Bob Casey and the Chamber of Commerce for Greater Philadelphia in October to discuss the Philadelphia region’s industry prowess. The visit included a trip to Spark Therapeutics’ lab to see its work first hand.
“It was a wonderful opportunity to host the meeting here and showcase the important work our industry is doing here in Philadelphia,” Spark CEO Ron Philip said, per a Chamber press release. “The ecosystem and diverse environment in Philadelphia, with easy access to world-class universities, medical centers, and many other partners, is really an integral part of Spark’s DNA.”
As Philly’s life science and tech industry grows, more companies look to move here — and according to CBRE, this has been reflected in rent growth in the area.
The national real estate services firm just released its 2022 Tech-30 Report which analyzes the tech industry’s impact on office space demand and rent rates in 30 markets and submarkets. University City in Philadelphia landed at the top of the list for highest rent growth.
The West Philly-adjacent neighborhood ranked first out of 30 tech markets with an 18% increase in average rent in the last two years. The average asking rent in this area is $48.06 per square foot and the vacancy rate is 8.4%. You can compare that to the broader Philly office market, which has a $30.85 per-square-foot asking rent and 20.4% vacancy rate.
Scott Miller, executive VP of CBRE, told Technical.ly that University City ranked the highest because of low vacancy rates and a lot of new construction, which require higher rent rates so landlords can get good investment returns.
“Tech companies are one of major space users attracted to the Philadelphia market, given the city’s many top colleges and universities that produce a highly educated workforce,” Miller said in a statement. “As a result, tech sector space in the market reflects a much lower vacancy and commands significantly higher rents when compared to more traditional office space.”
Higher rental rates have not necessarily hurt the Philly tech industry, though, and are actually relatively inexpensive when compared to other major cities.
“Three additional primary factors drawing tech occupiers to the submarket are the availability of highly educated and reasonably priced labor, affordable housing/cost of living, and proximity to major transit hubs,” Miller said in an email. “Philadelphia has seen a significant level of interest from companies looking to relocate from other regions and countries given the factors listed above. We see no reason why this should be affected in the near or long term.”
Philadelphia as a whole saw 6.3% growth in tech jobs between 2020 and 2021. Miller said CBRE expects to see more tech jobs created in University City in the second and third quarter of 2023.
The full report saw office leasing go down in the tech industry this year and tie with finance and insurance, and professional and business services. Each industry makes up for about 16% of leasing activity, but for tech, that’s a 5% drop from 2021. However, CRBE expects that tech companies will continue to rent space in Philadelphia to fill new construction.
Maybe we’ll be seeing Becerra around here again?
Sarah Huffman is a 2022-2023 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism. -30-