Since 2000, employment in education and healthcare has grown, but the surrounding suburbs have outperformed the overall Downtown office sector, said Paul Levy, CCD president. "Center City has continued to lose critical office jobs and market share to the suburbs," he said. The Center City office vacancy dropped to 13.7%, down from 16% a year ago, according to the report. The decline, however, is largely attributable to the removal of 429,650 sf office inventory due to residential conversion.

Because of strong growth in the suburbs of Pennsylvania, New Jersey and Delaware, office supply increased in the counties by 30% since 1999, while Center City's square footage grew by just 8%. As a result, the City's share of the overall region's office market continued to decrease in 2005 and now stands at 27%, down from its 41% share 12 years ago when CCD inaugurated its annual State of the City reports.

The Downtown office rental rates average $24 per sf, unchanged from a year ago. Class A rates west of Broad Street average $26.19 per sf, according to the report, while rates at similar buildings east of Broad average $22.01 per sf. This compares with an average of $35.10 per sf for class A office space in Bala Cynwyd, the nearest and most expensive of the surrounding suburbs.