According to the report….
“Since 2012, commercial real estate vacancy rates for Class A space in King of Prussia have been cut in half. Following a high of 20.4% in Q3 2012, the rate has steadily dropped to 10.4% at the end of Q2 2018. In 2012, the average leasing rate for Class A office space was at a 10-year low of $24.09/SF. In 6 years that rate has grown by 22% to $29.29/SF.
Although still unacceptably high, the vacancy rate for Class B has also seen a consistent drop to 20.6% from a 10-year high of 28.8%. Class C office space has fluctuated from the teens to the twenties after a 10-year high of 33.7% in Q4 2011. It currently sits at 18.3%, although seemingly an anomaly since the last quarter was reported to be 11.3%. The average leasing rate for Class B and Class C is $22.75/SF and $16.20/SF, respectively. The dramatic transformation of Class A office space in KOP has driven the aggregate vacancy rate down to 14.2% from a 10-year high of 22.3% in Q3 2012.
The vacancy rate for industrial properties decreased from a 10-year high of 5.8% to 1.2% at the end of Q2 2018 and the average lease rate for that same period increased from a low under $6 to $8.22/SF. The vacancy rate for flex space had a more dramatic shift by 66.7% over the same period from a 10-year high of 9.4% to 3.8% with lease rates at an all-time high of $12.75/SF at the end of Q2 2018. Based on the combined inventory of both flex and industrial, with 218 properties, the vacancy rate dropped 3.3% over the 10-year period to 2.4% with an increase in average leasing rate to $11.40/SF.
Overall, the KOP commercial office market and industrial/flex market appears to be extremely healthy and we believe that this trend will continue for the remainder of 2018 and into early 2019.”
-King Of Prussia District, July 2018
