{"id":5261,"date":"2022-07-28T11:35:20","date_gmt":"2022-07-28T15:35:20","guid":{"rendered":"https:\/\/www.lee-associates.com\/pennsylvania\/?p=5261"},"modified":"2022-12-28T15:27:28","modified_gmt":"2022-12-28T20:27:28","slug":"10-7-million-square-feet-of-net-absorption-in-warehouse-industrial-space-maintains-historic-low-1-99-vacancy-rate-in-philadelphia-area","status":"publish","type":"post","link":"https:\/\/www.lee-associates.com\/easternpa\/2022\/07\/28\/10-7-million-square-feet-of-net-absorption-in-warehouse-industrial-space-maintains-historic-low-1-99-vacancy-rate-in-philadelphia-area\/","title":{"rendered":"10.7 Million Square Feet of Net Absorption in Warehouse \/ Industrial Space Maintains Historic Low 1.99 Vacancy Rate In Philadelphia Area"},"content":{"rendered":"
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Lee & Associates of Eastern Pennsylvania Q2\u201922 data represents an increase of 10.7 million square feet of net absorption for Q2\u201922, with 56 million square feet under construction<\/em><\/p>\n

Mechanicsburg, PA (July 20, 2022) \u2013 The vacancy rate for warehouse\/industrial space in the greater Philadelphia metropolitan region remained at a historic low of 1.99% during the second quarter of 2022, on the strength of more than 10.7 million square feet of net absorption, according to the Q2 2022 Philadelphia Industrial Market Report | Logistics Set recently published by Lee & Associates of Eastern Pennsylvania. The leasing activity more than offset the delivery of approximately 9.3 million square feet of space during the quarter, with an additional 56 million square feet of space currently under construction. Approximately 34 million square feet of warehouse\/industrial space is expected to be delivered over the next two quarters, according to the report.<\/p>\n

\u201cDemand, leasing, and construction fundamentals are robust for the warehouse\/industrial real estate asset class in our market\u201d explained Lee Fittipaldi, Principal, Lee & Associates of Eastern Pennsylvania. \u201cThe greater Philadelphia region remains uniquely positioned for tenants, based on its regional population approaching six million consumers, strategic northeast location that can reach more than 35% of the United States population within a one-day truck drive, and quality labor that is needed to operate state-of-the-art logistics facilities.\"<\/p>\n<\/div>\n<\/div><\/div><\/div><\/div>

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\u201cDemand among logistics operators, the manufacturing industry, and other sectors remains vibrant with just under 39 million square feet of active tenant demand, with most looking to occupy by Q3\u201922,\u201d Fittipaldi continued. \u201cThere remains strong developer interest in land, but growing construction costs, inflationary concerns, and steadily rising interest rates have shifted pricing downward. We believe land pricing discovery will continue throughout early 3rd quarter before most developers reengage at reset market levels. As a result, there is currently a strong disconnect between leasing and capital markets, but we expect the balance of the year to remain extremely active in the Philadelphia region with strong absorption and leasing velocity, only tempered by available space.\u201d<\/p>\n

Lee & Associates of Eastern Pennsylvania reports nearly 160 active requirements in the marketplace currently, with an average size approaching nearly 250,000 square feet of space.<\/p>\n

\u201cBecause vacancy rates are projected to remain near historic lows and construction will continue to deal with material supply constraints and rising project costs, rental rates are expected to maintain a strong upward trend across the board,\u201d Fittipaldi added.<\/p>\n<\/div>\n<\/div><\/div><\/div>

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Download Full Q2 2022 Industrial Market Report<\/h3><\/div>
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Philadelphia area sub-market data<\/strong><\/p>\n

In addition to tracking data covering the greater Philadelphia region, Lee & Associates of Eastern Pennsylvania regularly reports information covering seven separate submarket clusters. Q2\u201922 data is contained below:<\/p>\n

Central Pennsylvania covering Dauphin, Lebanon, Cumberland, Franklin, Lancaster, York, Perry, and Adams Counties<\/strong><\/p>\n

\u00b7 Approximately one million square feet of net absorption resulting in 2.06% vacancy rate
\n\u00b7 17 million square feet of space under construction
\n\u00b7 750,000 square feet of new space delivered<\/p>\n

Lehigh Valley covering Berks, Lehigh, and Northampton Counties<\/strong><\/p>\n

\u00b7 3.5 million square feet of net absorption creating a 2.04% vacancy rate
\n\u00b7 3.4 square feet of new space delivered
\n\u00b7 8.5 million square feet of space under construction
\n\u00b7 Significant 900,000 square foot leases executed by UNIS in Northampton County and ULINE in Lehigh County<\/p>\n

Northeastern Pennsylvania covering Luzerne, Lackawanna, Schuylkill, Columbia, Cumberland, Salem and Atlantic Counties<\/strong><\/p>\n

\u00b7 2.5 million square feet of net absorption resulting in 1.59% vacancy rate
\n\u00b7 11.5 million square feet of space currently under construction
\n\u00b7 1.8 million square feet of new space delivered
\n\u00b7 New occupancies by Blue Buffalo (750,000 square feet); Mason Hub (563,000 square feet) and Thrive Market (458,000 square feet)<\/p>\n

Philadelphia Metro covering Bucks, Chester, Delaware, and Montgomery Counties as well as the Philadelphia City<\/strong><\/p>\n

\u00b7 300,000 square feet of net absorption resulting in 2.79 vacancy rate
\n\u00b7 5.3 million square feet of space under construction<\/p>\n

Delaware covering New Castle, Kent and Sussex Counties<\/strong><\/p>\n

\u00b7 1.6 million square feet of net absorption creating 0.68% vacancy rate
\n\u00b7 575,000 square feet of space under construction<\/p>\n

Southern New Jersey covering Burlington, Camden Gloucester, Cumberland, Salem and Atlantic Counties<\/strong><\/p>\n

\u00b7 1.5 million square feet of net absorption creating 1.96% vacancy rate
\n\u00b7 13.2 million square feet of space under construction<\/p>\n

Lower 81 covering Washington County, MD; Berkeley County, West Virginia and Winchester and Frederick Counties in Virginia<\/strong><\/p>\n

\u00b7 Approximately 620,00 of negative net absorption, pushing vacancy rate to 5.98%
\n\u00b7 7.5 million square feet of space under construction
\n\u00b7 Speculative deliveries led by Penzance (825,000 square feet) and Panattoni Development County (730,000 square feet)<\/p>\n

Port of Philadelphia reveals $3.5 billion capital investments plan<\/strong><\/p>\n

The Port of Philadelphia recently revealed plans to invest more than $3.5 billion in capital investments to ensure its long-term growth and maintain competitive with other East Coast ports. The work will impact the Port\u2019s entire footprint, ranging from the Packer Avenue Marine Terminal in Southern Philadelphia to the Tioga Marine Terminal, which is the Port\u2019s northernmost terminal.<\/p>\n

According to information reported by The Produce Reporter, the Port of Philadelphia experienced \u201cdouble-digit growth in containers, breakbulk and overall port tonnage\u201d in 2021. Twenty-foot Equivalent Unit (TEU) volumes increased 15% to nearly 740,000 TEUs and overall Port tonnage volumes grew 10% to more than 7 million metric tons. The previous high was set in 2017 with approximately 6.9 million metric tons.<\/p>\n

E-commerce consumer shopping habits fueling warehouse demand<\/strong><\/p>\n

Changes in consumer shopping habits fueled by the healthcare crisis and the forced lockdown of residents resulted in US e-commerce sales eclipsing the $1 trillion mark, which marks an all-time high, a trend that was rising steadily over the past five years but dramatically accelerated over the past 18 months. Retail real estate experts now consider shopping patterns permanently changed and, according to information released by the US Census Bureau, more than 13% of all retail purchases now come via digital orders.<\/p>\n

Lee & Associates of Eastern Pennsylvania is an affiliate of Lee & Associates, the largest broker-owned firm in North America with offices internationally.<\/p>\n

Read More About Industrial Real Estate<\/strong><\/p>\n