The opposite has occurred, David Jarjisian, senior vicepresident of the local office of CB Richard Ellis, tellsGlobeSt.com. "We're approaching the lowest vacancy rate since2000." He predicts, "the vacancy rate will drop another 2% to below10% this year and average rent rates will rise about $2 per sf,more in some cases."

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Jarjisian attributes much of the progress to a thrivingUniversity City, where the office vacancy is 1% and new buildingshave a rental rate of $32 per sf. "University City is the newfrontier," he says, noting, "600,000 sf of Center City office spacewas absorbed by companies moving in from University City." That isone, but not the only contributor to the CBD market's success, sayothers.

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"The Philadelphia CBD submarket, defying the expectations ofsome, has handled the additional two million sf of new office spaceintroduced to the market in the past year," says Tim Pulte,executive managing director of GVA Smith Mack, referring to CiraCentre and Comcast Center. "Additionally, CBD has seen a relativesurge in investment activity as nine Center City office buildingshave changed hands during the year, including one, 1760 Market St.,which traded twice in the span of two months."

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According to Pulte, "average asking rents in the trophy classincreased nearly $0.50 (per sf) year over year to $26.75." Heattributes the increase primarily to delivery of Cira Centre andpreleasing at Comcast Center, scheduled to deliver thisSeptember.

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Vacancy dropped 1.5% in the final quarter of 2006 to end theyear at 10.2%, according to Matthew Wright, research servicesmanager in the local office of Grubb & Ellis. The West Marketsubmarket, which is the priciest in Center City, led the overallmarket, according to Grubb data. It put the average asking rentrate at class A buildings there at $26.65 by year-end 2006,compared with an overall CBD, class A average of $25.85 per sf.

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