I am pleased to report that the King of Prussia commercial office market appears to remain strong. According to our analysis of CoStar data, Class A vacancy at the end of Q4 2018 is 10.2%, down from 19.2% in Q4 2008. The average lease rate remains near the 10-year high of $29.42 PSF (Q3 2018).

 

Class B, with a 18.7% vacancy rate, is nearly 11 points below the 10-year high of 29.5% (Q2 2014). The average lease rate for Class B commercial space is $22.87 PSF.

 

The biggest drop in vacancy rate is reserved for Class C commercial space. While this small inventory can fluctuate greatly from quarter to quarter, it remained in the double digits for most of the last decade. The current vacancy rate of 1.1% is down from a 10-year high of 32% (Q4 2011). The average lease rate remains consistent at $16.18 PSF. The continued performance of all classes in commercial office space keeps the aggregate vacancy rate at 12.3%, which is 10 points lower than the 10-year high of 22.3%. (Q3 2012). The average lease rate remains strong at $24.88 PSF (Q4 2018).

 

This past year provided the lowest average vacancy rate over a 10-year period for industrial space. Hovering around 1.5% for all of 2018, this was the best year out of a strong market that reached a high of 7% vacancy at the beginning of 2013. The average lease rate for 2018 was also the highest in the 10-year period at $7.33 NNN. The KOP flex space market didn't perform as well, with vacancy rates increasing to 4.1%, but average lease rates stayed relatively strong at $14.76 NNN. Overall, these numbers are incredibly strong, considering that KOP has more than 6M SF of commercial office space and 11M SF of industrial/flex space, the largest concentration of both categories in the suburban Philadelphia region.