Philadelphia’s office market showed signs of stabilization in early 2025, with positive annual net absorption for the first time in five years. However, challenges remain as companies continue to downsize, rents stay under pressure, and high interest rates suppress asset valuations. Here’s an update on what local industry players are saying about the market. Several brokers reported lease deals falling through because lenders refused to accept lower rents due to mortgage clauses. Strict loan conditions are complicating the recovery, preventing landlords and tenants from finalizing agreements.
The first office buildings are seeing rent resets after being sold at steep discounts. For example, a 1980s-era property in Center City traded at a 60% discount from its 2018 sale price, with rents dropping from the low $30s per square foot to the mid-$20s. These adjustments are expected to continue as more distressed buildings change hands. While distressed office sales have dropped between 20% and 60%, owners of well-occupied, premium assets are holding out for better financing terms to maximize value. With most sales involving distressed properties, the current comps don’t fully reflect the market’s future potential.
Wolf Commercial Real Estate, a full-service CORFAC International brokerage, advisory and property management firm, is a premier commercial real estate broker that provides a full range of commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other commercial properties for buyers, tenants, investors and sellers.
Please visit our websites for a full listing of Philadelphia commercial properties for lease or sale, www.wolfcre.com.
