February 2018—Philadelphia’s office market had a really good year in 2017, and that was largely thanks to the suburbs.

While being downtown can be advantageous for companies, placing them closer to the millennial workforce and their demand for the trendy live/work/play lifestyle, there are signs that the tides might be starting to shift in the City of Brotherly Love.

In 2017, the suburbs saw more than 1 million square feet of positive absorption, according to CBRE’s year-end report. Half of that was Class A office space, which had a vacancy rate of 11.9 percent, just over half the peak 2010 rate of 21.1 percent.

Meanwhile, City Center slid a little, and price-sensitivity may have been a factor. Incentive programs like Gateway Philly and WeWork’s commitment to helping smaller businesses shoulder the local wage tax help encourage suburban companies to relocate their offices to the city proper, but costs can still be prohibitive for many.

It’s no secret that millennials have been a huge force in reshaping city centers and driving real estate markets across the nation. In the last decade, Philadelphia added the largest percentage of millennials of any of the country’s 10 largest cities. In fact, today individuals between the ages of 18 and 34 make up almost one-third of the city’s population.

These younger workers want collaborative work environments, open space, seamless integration of technology, greener offices and walkability, not sterile office parks with their bland, blocky buildings and endless swaths of parking lots. Suburban developers are taking note.

Eric Goldstein, executive director of the King of Prussia Business District, has spent the past six years and $1 billion turning a mega mall into a desirable and trendy place to live, work and play. Located just 20 miles outside of Philadelphia, King of Prussia has already attracted business headquarters to its office space, national retailers to its town center and residents to its renovated luxury apartments. Thousands of square feet are already under construction, and there’s plenty more to come.

Suburban mixed-use developments like these are attracting millennials away from the city center, both to live and to work (triggering a rise in the “reverse commute”), but their continued growth will really depend on transit. For that reason, perhaps the most highly anticipated part of the KOP project is the King of Prussia Rail Line, which hopes to connect the business district with the Norris High Speed Line (NHSL) by 2025. SEPTA has made the rail line a high priority, noting that it will help to alleviate the notorious road congestion in the area.

The real estate community has been asking itself for years whether urban-loving millennials would follow in their parents’ footsteps and move to the suburbs as they grew older. In Philadelphia, at least, the success and adaptability of the suburban office market seems to be answering that question.