University City has experienced the fifth fastest office rent growth in North America between 2019 and 2021, according to commercial real estate firm CBRE.
CBRE published a report on Oct. 27 which showed that University City has increasingly attracted companies looking for space near universities and research centers. According to the report, as of 2019, around 30 development projects have been completed, therefore adding office space inventory and increasing rent prices.
CBRE reported that tech companies made up 22% of University City's office leasing activity as of the second and third quarter of this year—a 3% increase from 2020. Despite the pandemic, the tech industry continued to grow, aiding in the recovery of office leasing across the United States.
Scott Miller, who oversees CBRE's Tech and Media Practice in Greater Philadelphia, told Technical.ly that the rise in tech companies was a natural evolution that followed years of development in the area. Tech industries are gravitating towards University City with the hope of attracting the "talent pools" that Penn and Drexel University have to offer.
From 2019 to 2021, the average asking price in University City increased by $6.34 per square foot. Moreover, the current availability rate for office spaces is at an all-time low of 7.3%, CBRE found.
Penn has a long history of innovation. From creating the world’s first general-purpose electronic computer to groundbreaking vaccine research, Penn spends around $1.02 billion in Research and Development each year, according to Penn’s website.
Despite the growth of University City as a center for research, Center City has not seen the same increase in innovative talent, resulting in rent growth decreasing by 2.4% between 2019 and 2021. This decline can also be attributed to companies deciding to operate remote during the pandemic and not fully-returning to their office spaces, according to CBRE.
"The talent pool generated by universities in this submarket and its proximity to 30th Street Station continues to attract top technology companies, and we expect the submarket to continue to gain momentum," Miller told Technical.ly.