Terms and Definitions

Newmark Knight Frank Smith Mack is pleased to present our Quarterly Office Statistics for the Greater Philadelphia Area. As always, to ensure the accuracy of the information, each submarket report is researched and authored by the transaction manager specializing in that particular market or submarket. Please also view our terms and definitions to help you better understand our methodology.

Availability Rate
The amount of space being marketed for lease. It is calculated by dividing the total available square feet by the total rentable square feet.

Available Space
The total amount of space that is currently being marketed for lease. It includes any space that is available, regardless of whether the space is vacant, occupied, available for sublease or available at a future date.

Class "AA" Space
Building classification used to describe buildings that qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Such buildings are well located and provide efficient tenant layouts. These buildings contain modern mechanical systems and have above average maintenance and management as well as the best quality materials and workmanship in their interior and exterior finishes. They are the most attractive and eagerly sought after by the highest quality tenants. In the Greater Philadelphia area these buildings are found in the Central Business District.

Class "A" Space
Building classification used to describe buildings that qualify as extremely prestigious with above average rents and competing for premier users. Buildings have high-quality standard finishes, state-of-the-art systems, exceptional accessibility and a definite market presence. In the Greater Philadelphia area these buildings can be found in the Central Business District, Southern New Jersey, Suburban Pennsylvania and Wilmington, DE.

Class "B" Space
Building classification used to describe buildings with average rental rates for the area and competing for a wide range of users. Building finishes are fair to good and systems are adequate. These buildings lack prestige and must depend on lower prices to attract tenants and investors. In the Greater Philadelphia area these buildings can be found in the Central Business District, Southern New Jersey, Suburban Pennsylvania and Wilmington, DE.

Contiguous Blocks of Space
Space within a building that is, or is able to be, joined together into a single continuous space.

Building Deliveries
Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property.

Direct Space
Space that is being offered for lease directly from the landlord or owner of the building, as opposed to space being offered in a building by another tenant (or broker of tenant) trying to sublet a space that has already been leased.

Existing Inventory
The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation.

Full Service (FS) Rental Rate
Rental rates that include all operating expenses such as utilities, janitorial services, taxes and insurance.

Leased Space
All the space that has a financial lease obligation. It includes all leased space, regardless of whether the space is currently occupied by a tenant. Leased space also includes space being offered for sublease.

Leasing Activity
The volume of square footage that is committed to, and signed, under a lease obligation for a specific building or market in a period of time. It includes direct leases and subleases. It also includes any pre-leasing activity in planned, under construction, or buildings under renovation.

Net Absorption
Change in occupied space from one period to another. Calculated by summing all the positive changes in occupancy (moveins) and subtracting all the negative changes in occupancy (move-outs).

New Space
Sometimes referred to as first generation space, refers to space that has never been occupied and/or leased by a tenant.

Market
Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building type specific and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region. Markets can be further subdivided into Submarkets.

Occupied Space
Space that is physically occupied by a tenant. It does not include leased space that is not currently occupied by a tenant.

Sublease Space
Space that has been leased by a tenant and is being offered for lease back to the market by the tenant with the lease obligation. Sometimes referred to as sublet space.

Submarket
Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches boundaries of the Market they are located within.

Under Construction
The status of a building that is in the process of being developed, assembled, built or constructed. A building is considered to be under construction after it has begun construction and until it receives a certificate of occupancy.

Vacancy Rate
A measurement expressed as a percentage of the total amount of physically Vacant Space divided by the total amount of Existing Inventory. Under construction space generally is not included in vacancy calculations.

Vacant Space
Space that is not currently occupied by a tenant, regardless of any lease obligation that may be on the space. Vacant space could be space that is either available or not available. For example, sublease space that is currently being paid for by a tenant but not occupied by the tenant, would be considered vacant space. Likewise, space that has been leased but not yet occupied because of finish work being done would also be considered vacant space.

Weighted Average Rental Rate
Rental rates that are calculated by factoring in, the square footage associated with each particular rental rate. This has the effect of causing rental rates on larger spaces to affect the average rental rate more than smaller spaces. The weighted average rental rate is calculated by taking the ratio of the square footage associated with each rental rate to the square footage associated with all rental rates, multiplying the rental rate by that ratio, and then adding together all the resulting numbers.