The Philadelphia Commercial Real Estate Market

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Philadelphia, the City of Brotherly Love, stands proud as one of the nation’s most popular commercial real estate hubs for investment and leasing.

Pennsylvania’s largest metropolitan area serves as one of the oldest cities in the United States. In recent years, the city has experienced a swell of development and repurposing projects, attracting investors and potential tenants alike. Crexi connects individuals seeking Philadelphia commercial real estate with thousands of properties and the tools they need to analyze and transact investments.

Philadelphia brokers and agents nationwide representing Philadelphia properties can harness Crexi’s platform and suite of sale and leasing tools to build their network and complete more deals. As of this writing, Crexi’s CRE tools have helped brokers facilitate more than $300 billion in commercial property transactions and represented over $1.2 trillion in listings.

Crexi is proud to serve Philadelphia, Bensalem, Levittown, Langhorne, Fairless Hills, and the surrounding communities as the area’s fastest-growing online CRE platform.

A downtown corner ice cream shop in Philadelphia.

The State of Philadelphia Commercial Real Estate 

Philadelphia is the largest city in Pennsylvania and the sixth-most populous city in the United States. Founded by William Penn in 1681, the city is home to many historical landmarks, such as the Liberty Bell and Independence Hall. It is also home to a large number of museums, including the Philadelphia Museum of Art. 

Philadelphia is a major center for education and research, with numerous colleges and universities located within its boundaries. The city is also a major transportation hub, with an extensive network of highways, railroads, and airports.

There are a variety of reasons why investors love Philly. The metropolitan area is good for commercial real estate investing because of the strong economy and the city’s location. The economy is driven by the healthcare, education, and technology industries. 

Philadelphia is also located in a convenient location for businesses that need to be close to both New York City and Washington, D.C. Additionally, the city has a large population and a diverse economy, which can provide a stable base of customers and tenants for businesses.

Looking down the street between several skyscrapers, pedestrians, and public transport in Philadelphia.

Philadelphia Regional Breakdown

Philadelphia’s population growth is largely due to in-migration from other parts of Pennsylvania and from out-of-state. The city has seen a 5% increase in population over the last decade, while suburban Montgomery and Chester counties have each experienced approximately 7% growth:

  • Philadelphia is home to over 1.6 million in the city and more than 6.2 in the greater metropolitan area.
  • Population of Philadelphia has grown for more than 10 years in a row and has increased by 5% over the last decade.
  • Philadelphia is the largest city in the Commonwealth of Pennsylvania and the 2nd most populous in the Northeast, just behind New York City.
  • Median age in Philadelphia is 38.9 years, a little less than the figure for the state.
  • About 39% of the population is between the ages of 20 and 49.
  • Per capita income in Philadelphia is $40,420 while median household income is $74,825.

The economy of Philadelphia was flourishing prior to the pandemic, with a growing job market, rising educational attainment, and rapid building development as developers struggled to meet the demand for commercial real estate in metropolitan Philadelphia.

Today, Philadelphia’s economy is on the rebound, with industries such as life sciences and the Center City District driving growth. According to the U.S. Bureau of Labor Statistics, the sectors showing the fastest signs of recovery include construction, information, professional and business services, and leisure and hospitality:

  • GDP for the Philadelphia-Camden-Wilmington MSA is more than $439 billion and has increased by over 27% since 2010.
  • Unemployment rate in Philadelphia is 4.0% as of May 2022.
  • Employment sectors with the fastest growth include manufacturing, trade and transportation, information services, professional and business services, and leisure and hospitality.
  • Major industry sectors in metropolitan Philadelphia include life sciences, logistics, information technology, and financial and professional services.
  • Largest employers include Comcast Corporation, Virtua Health, and the University of Pennsylvania and Health System.
  • Notable corporations headquartered in the metro area include Cigna, Colonial Penny, Pep Boys, GlaxoSmithKline, and the Philadelphia Stock Exchange.
  • University of Pennsylvania (Wharton) and Princeton University are two of the nearly 100 universities and colleges located in the greater Philadelphia area.
  • 39% of the residents hold a bachelor’s degree or an advanced degree.
A yellow building in downtown Philadelphia.

Speaking on regional trends, President and Broker of Record at the Philly-based Mosaic Brokerage Group Alicia Magill reports, “Geographic submarkets on the rise are Port Richmond, South Philadelphia, Navy Yard, and South of Navy Yard — Anything along water-front areas that can be accessible to the outdoor living and entertainment.”

The Greater Philadelphia region is home to three major interstates, the New Jersey and Pennsylvania Turnpikes, the Port of Philadelphia, six international airports, and the second-largest shipping hub for UPS. Sixty percent of the U.S and Canadian population is within a two-hour flight of Philly, while nearly 40% of the U.S. population is within a one-day drive.

Philadelphia Industrial Market

Robust e-commerce sales and consumer spending are driving the demand for industrial space in the Philadelphia metropolitan area. Building values are escalating due to significant investor demand, with tenants less focused on cost and more on finding the right industrial space to suit their requirements:

  • Total industrial inventory: 500,418,106 SF
  • Average asking rent: $7.83/SF per year, NNN
  • Vacancy rate: 4.1%
  • Absorption: 4,508,457 SF in Q1 2022
  • Key lease transactions by tenant: Performance Team 721,000 SF, Noble House Furniture 704,700, Savino Del Bene 506,269 SF, UPS 455,280 SF
  • New construction: 20,300,000 SF currently under construction
  • Investment sales trends: $383 million in Q1 2022, median sales price $77/SF, market cap rate 6.5%
  • Largest industrial submarkets by county: Philadelphia, Montgomery, Bucks, Lancaster

“Like most of the country, the top emerging property type are last mile distribution centers. These warehouses, mostly in Southern New Jersey and the Lehigh Valley Area, are quickly being built in order to keep up the growing demand of online shoppers,” reports Keith Burke, Director of Investment Sales at Mosaic Brokerage Group, “Given the close proximity of densely populated cities in the North East, these distribution centers can serve clients from Philadelphia, North New Jersey, New York, and Baltimore.”

Discover Philadelphia industrial space for rent.

Philadelphia Office Market

With the mask mandate in Philadelphia recently listed, the office market in Philadelphia is showing signs of improvement. Key metrics including average asking rent and quarterly net absorption are forecast to rise over the next 12 months:

  • Total office inventory: 109,819,325 SF
  • Average asking rents: $30.87/SF per year, full service gross
  • Vacancy rate: 17.4%
  • Absorption: -218,623 through Q1 2022
  • Key leases by tenant: Drexel 60,000 SF, Janssen Supply Group 58,155 SF, Customers Bank 40,368 SF, Cash App 35,000 SF
  • New construction: 1,610,000 SF currently under construction
  • Investment sales trends: $752 million in acquisitions in Q1 2022, sales price $233/SF, market cap rate 8.0%
  • Largest office submarkets: West Market, King of Prussia, Blue Bell/Plymouth Meeting

Discover Philadelphia office space for lease. 

Philadelphia Retail Market

The Philadelphia retail leasing market continues to show signs of bullishness in both suburban and urban locations from both traditional retail tenants and experiential venues. Mosaic Brokerage Group’s Magill is optimistic about Philly’s revitalization: “All sectors of industry have been affected by the pandemic. Many businesses have re-imagined their programming and sales pitches to support the ‘new norm.’ I wouldn’t necessarily say this is all negative or detrimental recourse. Life is all about cycles. This is just another cycle, and it actually pushed people to think outside of the box and come up with lucrative ways to stay in business.”

Investors like what they see in Philly as well, as buyers in metropolitan Philadelphia continue to view retail properties as a viable alternative to industrial and multifamily product:

  • Total retail inventory: 124,036,202 SF
  • Average asking rent: $18.83/SF per year, NNN
  • Vacancy rate: 8.6%
  • Absorption: 1,137,076 YTD (through Q2 2022)
  • Key leases by tenant: Ross Dress for Less 21,028 SF, Planet Fitness 21,000 SF, Gap 12,181 SF, Banana Republic 6,686 SF
  • New construction: 294,000 SF currently under construction
  • Investment sales trends: $549 million in Q1 2022, transaction sales price $172/SF, market cap rate 7.1%
  • Largest retail submarkets by county: Philadelphia, Montgomery, Bucks, Burlington
  • Median household income: $74,825 with 65% of households earning more than $50K per year

Discover Philadelphia retail property for lease.

the bank of the Philadelphia river.

Philadelphia Multifamily Market

Annual multifamily rent growth in Philadelphia remains in the double-digits as fundamentals remain strong and the job market continues to grow. Developers delivered over 7,200 new units last year with nearly 13,000 additional apartments currently under construction:

  • Total housing units: 2,497,830
  • Renter occupied: 33%
  • Multifamily inventory: 624,457 units
  • Average effective asking rent: $1,744
  • Rent growth: 14.6% year-over-year
  • Vacancy rate: 1.6%
  • Investment sales trends: $516 million in Q1 2022, median sales price per unit $179,543, 5.2% average cap rate
  • Median household income: $74,825
  • Per capita income: $40,420

Discover Philadelphia multifamily property for sale.

How Crexi Connects Buyers and Tenants to Philadelphia Commercial Real Estate

Investors and tenants eyeing Philadelphia as the home of their next commercial property can find their perfect match using Crexi’s straightforward search functionality and numerous listings.

Interested tenants or buyers can browse through hundreds of Philadelphia commercial properties for lease or sale in a handful of clicks. Crexi’s robust search tools empower buyers or tenants to quickly narrow searches by square footage, price or rate per square foot, asset type and subtypes, cap rate, vacancy, and neighborhood. 

When they’re ready to take the next step, buyers and tenants can directly connect with the listing’s brokers to learn more. Browsing property seekers can also download PDFs and flyers and even submit a letter of intent (LOI) on the property page.

Two office workers looking at Crexi's marketplace on a laptop.

Intelligence Equips Investors with Data and Market Knowledge 

Data and research are essential tools for any commercial real estate investor’s arsenal. Crexi Intelligence equips Philadelphia property seekers with up-to-date, relevant in-market data to identify and analyze promising properties.

Intelligence contains detailed property records and comps on hundreds of thousands of closed assets. A detailed Insights tab showcases real-time Minneapolis market data on every page, such as average regional square footage, demographic insights, foot traffic levels, etc. 

Intelligence is available to buyers, sellers, and tenants on a subscription basis.

How Philadelphia Brokers Thrive with Crexi

Philadelphia brokers market nearly 1300 properties for sale and lease on Crexi within the city limits alone. Commercial agents in Philadelphia represent a hotspot of property opportunities, ready for investors to take advantage of the city’s growing population and expanding economy.

Philadelphia brokers harness Crexi’s broker tools to list the properties they represent to a national roster of active property seekers. A robust broker dashboard gives agents real-time insight into every lead that visits their pages, allowing them to engage and connect instantly.

“I think the technology and user platform is very user friendly, yet also surpasses most of the competition with data and integration,” attests Magill.

Philadelphia commercial brokers can list properties across different asset classes, including: 

  • Multifamily developments
  • Retail properties
  • Industrial buildings
  • Land parcels
  • Offices
  • Hospitality
  • Mixed-Use buildings
  • Non-traditional properties such as self-storage, data centers, etc.

Philadelphia brokers use Crexi’s online tools to navigate their clients’ assets from the list to close, including file management and secure storage to process due diligence paperwork.

And while Crexi’s free broker tools are impressive, Crexi’s real advantages emerge with Sale PRO, Lease PRO, and All PRO

Crexi PRO Dashboard 2020

Crexi’s All PRO Membership

Crexi PRO enhances Philadelphia brokers’ workflow with advanced tools designed to simplify pipelines and win more deals. PRO brokers enjoy access to highly detailed lead information, management, and reporting tools that allow them to prioritize connections and engage with the most valuable leads.

Brokers using PRO also receive preferential tile placement for their listings atop Crexi’s machine-learning-curated search pages. Weekly email blasts also connect PRO listings to relevant property seekers, winning a 10-15% higher engagement rate than industry benchmarks.

PRO users also enjoy Intelligence access as a part of the subscription, allowing them to enhance their in-market knowledge and provide further value for their clientele.

With Crexi PRO, brokers can easily connect with the 304,000+ leads who have sought properties in the Philadelphia MSA over the last two years and the 12.5 million+ leads across the nation who looked for property on Crexi in 2021.

On average, Crexi PRO brokers successfully acquire 125% more leads and close six to eight times more deals than non-PRO users. 

Contact to learn more about All PRO.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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