How the pandemic is changing Philadelphia's commercial real estate
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Brendan Lynch/Axios
Commercial real estate brokers are scrambling to make office spaces more enticing after the pandemic led many companies to overhaul how and where we work.
What's happening: As hybrid work environments become the norm, some commercial real estate companies, like CBRE, believe flexible office leases will continue to rise in popularity.
- Meanwhile, some brokers are focusing on attracting office buildings that offer more lenient contracts in general.
By the numbers: Between midyear 2020 and midyear 2021, flex office space fell by 9.2% across the country after growing for nearly a decade, but it's slowly making a modest recovery on a national level.
Context: Flex space refers to offices that come fully furnished and often have their own IT infrastructure. They typically charge by seat rather than by square-foot capacity.
- Companies can sign leases as short as a month or as long as three years, while traditional office space leases are typically five years or more.
- To entice more clients, many flex office providers are offering on-demand, pay-by-use memberships or subscription-based services.
Zoom in: The types of industries with a high demand for office space in Philadelphia are life sciences and bioscience, as they continue to need more lab space.
- Coworking spaces that cater to small startups in the life science sector are also growing in demand in the Philadelphia region.
What they're saying: Jason Kramer, a senior vice president at Binswanger, told Axios he's been pushing landlords to put in place more expansion, consolidation and subletting options for tenants.
- It's common for clients to be hesitant to commit to long leases because most are still figuring out the future of work, he said.
Joe Gibson, associate director of research at CBRE, said that "it's no secret that of all the different commercial real estate sectors, the office has been more impacted since the beginning of the pandemic."
- But "in two or three years, we'll see recovery, and the worst will be behind us," Gibson said.