The fourth quarter of 2007 saw 714,000 sf of positiveabsorption. It was the ninth consecutive quarter of positiveabsorption, says Scott Miller, first VP with CB Richard Ellis. "Weare projecting for the next couple of years a positive absorptionof between 350,000 sf and 400,000 sf a year," says Jack Soloff, SVPwith Grubb & Ellis. There is expected to be a record level ofabsorption in 2008, Miller says. "As of Jan. 15, there was 885,000sf of absorption with certainly more to come," he says. The vacancyrate for the fourth quarter was slightly more than 8%, the lowestit has been since 2001, according to the fourth quarter marketreport by CB Richard Ellis.

The nearly 1.3-million-sf Comcast Center was recently deliveredwith no additional new office buildings expected to come online forthe next three years, Scheuerle says. Brandywine Realty Trust hasbroken ground for Cira Centre South but it will likely be 24 monthsbefore the building is delivered, Miller says. The Internal RevenueServices and Pennsylvania Health Systems have already signed on astenants for Cira Centre South, he says. Some older buildings havebeen converted to hotel and residential buildings which haseliminated some office space. "We do not expect that [trend] willcontinue due to an abundance of condos that currently sit on themarket for sale," Miller says.

Rental rates for class A office buildings also hit an all-timehigh in 2007. The asking lease rate at the end of the year was$29.47 per sf, according to the Grubb & Ellis report. It wasthe ninth consecutive quarter that rental rates increased in thecentral business district, Miller says. Rental rates for class Aoffice properties have increased 18% in the past three years andare expected to increase 8% in 2008, says Craig Scheuerle, SVP withGrubb & Ellis.

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