Flight to quality creates a growing supply of lower-tier space
Class A product in Philadelphia is shrinking, as demand for top-tier space and residential conversions of Class A buildings leave fewer options for tenants—particularly in the Philadelphia Central Business District (CBD). Year over year, CBD Class A availability declined 350 basis points to 21.1%, while trophy availability stands at 21.4%. Within Downtown (West Market), trophy space is especially constrained, with availability falling 170 basis points to 17.3%.
In the suburbs, tenant preferences mirror those in the CBD, with continued flight to transit-oriented, amenity-rich assets. This demand has further compressed availability in the Class A segment, pushing more lower-tier space onto the market. Suburban Class A availability decreased 40 basis points year over year to 27.6%.