Could Comcast’s New Tower Hurt the Commercial Real Estate Market?

New York Times suggests new skyscraper could drive down rents, make other buildings seem shabby.

The New York Times today examines what Comcast’s giant new tower might mean for the Philadelphia commercial real estate market. Maybe nothing—“It just shows there is significant demand in the marketplace,” one expert is quoted as saying—but maybe something:

But David M. Scolnic, a real estate lawyer with the Philadelphia firm of Hangley Aronchick Segal Pudlin & Schiller, said the new supply would be likely to stabilize or even drive down rents, as well as shift perceptions about what constituted a “trophy” building in the city.

While the new building and the existing Comcast headquarters will be sought after as prestigious corporate locations, others with older facilities are likely to lose their appeal as the most desirable premises, Mr. Scolnic predicted.

“Observers believe that there’s a shortage of large blocks of space in those buildings,” he said. “I think that’s exaggerated, and I think this building will bring people back to reality because there is a general contraction still of big users of those spaces and there are now quite a lot of floors being made available.”

For example, he predicted rents would come under pressure in one building, currently seen as being in the “trophy” category, where Comcast has some of its employees. They will be moving out when the new offices are built.

“It’s going to put pressure on those landlords to get more realistic about some of their expectations,” Mr. Scolnic said.

Still, the Times says, the new building should “encourage boosters of a city that has long harbored an inferiority complex” to New York and Washington.

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  • Earl J

    Well if the NYT said something about Philly then it must be true……….

  • Philly Urban Living

    I disagree with NYT and Scolnic.

    Competition is always good, especially in Center City’s commercial, “trophy” market right now. CC is currently experiencing its lowest vacancy rate ever, as well as its highest rent rate ever.

    CITC will only add to the attractiveness of CC, and will also encourage additional, smaller commercial to infill around it. Which should strengthen CC’s commercial district even more.

  • NateFried

    Comcast bought a majority of its first building, so I doubt they will be moving out of it. And their new building is slated to be completely filled. Yes… offices in liberty tower will be jealous, but there is no room for them. Not sure how that would drive down rents. If anything, it would create a market for another expanding CC company to build another skyscraper.

    • Brian Marsh

      I think he’s inferring about Centre Square or 3 Logan, two buildings where Comcast leases space.

  • matthew brandley

    Thers already a surplus of cre in the cc and phila area . If anyone drives into the surrounding ares they will see vancant office buildings that have been sitting empty for years that where built 5 , 10 years ago and have never been occupied. . the collpasing commercial and real estate market will have the same effect on phila this year.

  • JJ

    Stay in New York!

  • Common Sense

    Really, does anyone think the NYT is going to write a piece to help Philly?

  • crateish

    Comcast’s taxpayer funded monolith exists solely to give the finger to consumers.

  • Cook Commercial

    Later this month, the government is expected to make the program available for existing commercial mortgage securities.