Philadelphia Office Figures Report Q1 2026

A modest recovery was underway across the greater Philadelphia office market to start 2026. For the fifth consecutive quarter, vacancy fell while the market posted positive net absorption for the third consecutive quarter. And the recovery appeared widespread as all market segments posted occupancy growth except for the Lehigh Valley which tallied 30,000 sq. ft. of negative absorption, a modest amount.

But the most convincing sign of recovery was the Class A building set’s performance during the past few quarters. As the persistent flight-to-quality trend starting before the pandemic sustained through present day, the supply of trophy space dwindled, presenting fewer options for occupiers. This pushed demand into the Class A portion of the market – the portion of the market that suffered the worst occupancy deterioration since 2020 as these buildings could not compete on quality with trophy or price with Class B and C assets. But Class A vacancy shrank 280 basis points since reaching a peak 27.5% at the end of 2024, pointing to a more ubiquitous recovery.