What's bad for builders is good for their competitors - landlords with existing properties.
New space is seductive to growing companies, bargain-hunters and new bosses looking to move work someplace closer to home. When there isn't any, they have to make do with what they have - or pay more.
So in the Philadelphia area, where building rents have been roughly flat after discounting inflation over the past decade, the recent credit crunch is "good news for landlords," said Bob Clements, head of commercial real estate broker Grubb & Ellis's Philadelphia region.
Even if demand is down, Clements figures the supply of new properties will also slow as publicly-traded real estate trusts are forced by high financing costs to sit on the sidelines, and private investors become more choosy.
Center City Class A vacancy rates this year slipped below 10 percent for the first time since 2000-01, while rents asked for Class A space rose to around $29, from $26 a year earlier, according to Grubb & Ellis data. In the suburbs, a few small sub-markets - Jenkintown, Hockessin, Cherry Hill -- show still lower vacancies. Among the highest suburban vacancy rates are in the Horsham area, where moves by GMAC and other big employers have left one-fifth of the office space vacant.
Grubb & Ellis representatives presented the data Tuesday it the firm's yearly real estate forecast.
Chester County's biggest employer, Vanguard Group, is getting closer to building new offices in Uwchlan Township, said Jim Dugan, the brokerages's head for the city's western suburbs. Bridges and culverts have been built at a farm the company bought in 1999, said spokeswoman Amy Chain, adding, "We are committed to building on the site and will be presenting final site plans to the township in the near future. However, there is no timetable set for ground breaking."
Nearby at the old National Rolling Mills-Worthington Steel site, developer Brian O'Neill plans 185,000 square feet of offices alongside 745,000 square feet of retail space.
The vacancy rates along US 202 varies from around 14 percent in King of Prussia, to 11 percent in the US 30 corridor around Exton, to 15 percent in teh West Chester - Chadds Ford area, with rents in the mid to upper $20s.