Philadelphia's commercial property heats up

Chicago

THE City of Brotherly Love is finally getting some affection from commercial real estate investors.

Philadelphia, where office properties last year attracted about half the investment of Washington and less than a 10th of Manhattan's total, is seeing a boom in demand that has sent the average price per square foot to a record. Office sales in the first half of this year more than doubled to US$1.4 billion, the highest since close to the market's peak in 2006, according to New York-based research firm Real Capital Analytics Inc.

Real estate values approaching or surpassing peak levels in New York, Boston and Washington have buyers turning to Philadelphia for its higher yields, rising rents and falling vacancies. That's bolstering office deals in the fifth-largest US city at a…