Quarterly Market Update Q2 2025
Section 1: Center City District
Boundaries
Section 2: West Market Office District
Center City District Boundaries
3 Key
Takeaways Within CCD
Boundaries
45 Leases Signed Through Q2 2025 YTD
May 2025 RTO Rate: 70% Up 6% MoM Up 3% YoY Q1 2025 Office Occupancy 80.4% Down 0.4% QoQ
The number of office leases signed within the CCD boundaries through April 2025 decreased 62% compared to 2024, but overall leased space was only down 28%, meaning that average deal size has ticked up. Total office vacancy is hovering at 20.4%. Employee volumes within CCD boundaries during typical office hours are around 70% of pre-pandemic levels.
Leasing Activity by Quarter (Class)
Leasing activity hit a threequarter high in Q1 2025 thanks to large renewals from Duane Morris and Faegre, Drinker, Biddle & Reath recommitting to their spaces at 30 S. 17th Street and One Logan Square, respectively. This helped push this most recent quarter to the second-highest gross square footage leased in Center City since the beginning of 2023.
Source: CoStar
Leasing Activity by Quarter (Direct/Sublease)
Direct deals with landlords make up the overwhelming majority of leasing. Much of the market's sublease space is in older, commodity assets that are poorly positioned to compete for most of the larger tenants in the market, many of which are law firms who typically seek out high-quality fit-outs.
The limited amount of high-end sublease space available, such as Comcast's vacated floors at Three Logan Square, are seeing a lot of activity and successfully backfilling with smaller, but notable, tenants.
Source: CoStar
Significant Deals (2025 YTD)
Duane Morris
30 S. 17th Street
Duane Morris reaffirmed their commitment to Center City, by renewing their lease at 30 S. 17th Street until 2039 at nearly 196,000 square feet. This represents a 19% reduction of space from their previous lease, opening up some space in their building but keeping a larger share of their footprint than other large law firms.
FS Investments
3025 JFK Blvd.
In February, FS Investments announced the move of their global headquarters out of the Navy Yard and into 117,000 square feet at 3025 JFK Boulevard in Schuylkill Yards. While not within CCD boundaries, this relocation to a Center Cityadjacent location is notable as it speaks to the value of locations that are transit accessible and amenity-rich.
Significant Deals (2025 YTD)
Fanatics
Three Logan Square
Fanatics, a global leader in sportswear and apparel, recently subleased 15,640 square feet on the 48th floor of Three Logan Square. Fanatics has major outposts in Conshohocken, New York City, and Jacksonville, and now occupy their first office space within Philadelphia proper.
Faegre, Drinker, Biddle & Reath
One Logan Square
Law firm Faegre, Drinker, Biddle & Reath LLP renewed their office space in One Logan Square, giving back one full floor for a 20,762 square feet, or 14% reduction, from their previous lease. This is a smaller contraction than many recent law firm deals which have been averaging givebacks of nearly 40% since the pandemic.
Property updates – The Wanamaker Building
TF Cornerstone has gained complete control of the property after a foreclosure auction. They can now move forward with their multi-phase plans to transform the historic anchor of Market East, beginning with an announcement to bring 600+ residences to the upper floors. Construction is set to begin in early 2026. The office space on floors 4 and 5 will remain. Mindspace, a coworking operator, has been in operation since 2021 and is home to many firms, including Field Operations. Cultural uses are anticipated for the 3rd floor, and a mix of new retailers will occupy floors 1 and 2, with the publicly accessible Grand Court and Organ remaining intact and operational.
Property updates – One South Broad
One South Broad Proposed
464,000 s.f.
Newmark is marketing this iconic South Broad Street skyscraper which houses Insomnia Cookies’ corporate headquarters on its lower floors. The building’s pre-war footprint, close-up view of City Hall and location near Midtown Village could make conversion to residential feasible and appealing.
Vacancy by Class
Despite high leasing activity this past quarter, Trophy vacancy increased by approximately one percentage point, due to several footprint reductions from tenants in Trophy buildings including Glenmede at One Liberty and Faegre Drinker at One Logan. Despite these moves resulting in greater vacancy and availability, Trophy assets remain the best occupied by far compared to Class A & B.
Source: CoStar
Absorption by Class
While Trophy absorption remains net positive tracking back to the beginning of 2024, several larger tenant contractions recorded in 2025 contributed to a drop in occupancy in Trophy properties compared to recent quarters. This creates new blocks of high-quality space for those tenants currently in the market.
Source: CoStar
Center City still sees a large proportion of leasing activity across the region
Leasing activity is still at depressed levels compared to pre-pandemic across the entire Philadelphia region.
As the flight-to-quality continues to take hold, the office space shuffle is happening in both the CBD and the suburbs. Center City has a competitive advantage in this regard, with 7.9 million square feet of “Trophy”class space that remains of higher quality than most suburban office inventory.
Since the beginning of 2024, Market Street West has seen by far more leasing activity than all other submarkets, and the combined CBD accounts for 33% of all leasing activity in Southeastern PA.
Source: JLL
Return to Office
CCD Boundaries – Weekdays 8 a.m.-6 p.m.
Across CCD's boundaries, non-resident workers (across all sectors) have returned at increasing rates since the beginning of 2025, with May topping out at 69% of 2019 levels. The winter months showed sluggish RTO relative to 2024, but the spring has seen these rates fall in line with last year.
Methodology note: These data are provided by Placer.ai using anonymized samples of cell phone locations. A recent change by Placer.ai in its categorization of what constitutes a visitor and an employee have resulted in employee volumes decreasing and visitor volumes increasing as the platform more accurately determines who is traveling regularly for employment.
Source: Placer.ai
West Market Office District
West Market Office District – Recent Retail Leasing
Cake and Joe
1735 Market
1,200 s.f.
Five Iron Golf
Three Logan Square
4,800 s.f.
Unnamed Japanese Restaurant
1515 Market
TBD
This will be the third location for South Philadelphia-founded Cake and Joe, which operates in Pennsport and Fishtown. This brings a much-needed coffee and food offering to the primary office corridor.
Five Iron Golf is now open at Three Logan Square, bringing an experiential activity to the office district while expanding options for happy hours, corporate outings, and wellness events.
A new concept from local restaurateur Teddy Sourias, who operates the adjacent Uptown Beer Garden, will replace the HSBC Bank with an active use that can draw activity into the evening hours. Timing is TBD.
Revolution Taco Express & Pagano’s
Comcast Concourse
TBD
As workers have returned to the Comcast Campus, the Concourse is undergoing a refresh with new dining options on the way.
West Market Office District – Conversions
1701 Market
Nearing completion
300,000 s.f.
Now called 17 Market West, the building welcomed its first tenants at the beginning of May even as full build-out of amenity spaces is ongoing.
2100 Arch Underway
121,500 s.f.
MM Partners is undertaking this conversion, which will bring more residential density to Arch Street along the northern edge of the office district.
West Market Office District – Conversions
Three
Parkway Nearing completion
175,000 s.f. The lower stack of the building, recently vacated by Drexel, will accommodate 143 apartments while the top ten floors of the building will remain as office. Several floors are finished and move-ins are underway.
Ten Penn Center
Proposed
675,000 s.f.
JLL is in the market with this Penn Center office tower, the largest building to come up for sale in several years. A partial conversion to residential in the upper stack of the building is one idea being considered.
West Market Office District
Employee Recovery – 2024 Average
While the rate of return is not as high within the West Market office district as it is across the more diversified CCD area overall, 2025 rates of RTO have outpaced last year in every month except February.
Methodology note: These data are provided by Placer.ai using anonymized samples of cell phone locations. A recent change by Placer.ai in its categorization of what constitutes a visitor and an employee have resulted in employee volumes decreasing and visitor volumes increasing as the platform more accurately determines who is traveling regularly for employment.
Source: Placer.ai