PHILADELPHIA-For the eighth consecutive quarter the central business district’s office market posted gains, according to fourth-quarter 2006 reports from three area brokerage firms. This marks a complete reversal of year-ago predictions that vacancy would rise and rental rates would slide.

The opposite has occurred, David Jarjisian, senior vice president of the local office of CB Richard Ellis, tells “We’re approaching the lowest vacancy rate since 2000.” He predicts, “the vacancy rate will drop another 2% to below 10% this year and average rent rates will rise about $2 per sf, more in some cases.”

Jarjisian attributes much of the progress to a thriving University City, where the office vacancy is 1% and new buildings have a rental rate of $32 per sf. “University City is the new frontier,” he says, noting, “600,000 sf of Center City office space was absorbed by companies moving in from University City.” That is one, but not the only contributor to the CBD market’s success, say others.

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