{"id":8724,"date":"2026-04-13T17:22:34","date_gmt":"2026-04-13T21:22:34","guid":{"rendered":"https:\/\/www.lee-associates.com\/easternpa\/?p=8724"},"modified":"2026-04-13T17:22:35","modified_gmt":"2026-04-13T21:22:35","slug":"q1-26-industrial-market-report","status":"publish","type":"post","link":"https:\/\/www.lee-associates.com\/easternpa\/2026\/04\/13\/q1-26-industrial-market-report\/","title":{"rendered":"Eastern PA Industrial Market Continued to Stabilize in Q1 as Vacancy Declined and Leasing Activity Remained Active"},"content":{"rendered":"<div id=\"pl-8724\"  class=\"panel-layout\" ><div id=\"pg-8724-0\"  class=\"panel-grid panel-no-style\" ><div id=\"pgc-8724-0-0\"  class=\"panel-grid-cell\" ><div id=\"panel-8724-0-0-0\" class=\"so-panel widget widget_sow-editor panel-first-child panel-last-child\" data-index=\"0\" ><div\n\t\t\t\n\t\t\tclass=\"so-widget-sow-editor so-widget-sow-editor-base\"\n\t\t\t\n\t\t>\n<div class=\"siteorigin-widget-tinymce textwidget\">\n\t<p><strong>MECHANICSBURG, PA. April 14, 2026<\/strong> \u2014 Lee &amp; Associates of Eastern Pennsylvania reported continued improvement across the Greater Philadelphia region industrial market in the first quarter of 2026, as vacancy declined to 8.44%, positive absorption continued, and a more disciplined construction pipeline helped ease pressure from the post-COVID development cycle.<\/p>\n<p>The Q1 report tracks the region\u2019s six primary submarkets: Central Pennsylvania, Lehigh Valley, Northeastern Pennsylvania, Metro Philadelphia, Southern New Jersey, and Delaware. According to the report, four of the six submarkets are now at or below structural vacancy, signaling improving balance across much of the region.<\/p>\n<p><strong><em>\u201cThe biggest takeaway from the first quarter is that this market is continuing to move in the right direction,\u201d<\/em><\/strong> said Heather Kreiger, Regional Research &amp; Marketing Director and Principal at Lee &amp; Associates of Eastern Pennsylvania. <strong><em>\u201cVacancy has been trending down quarter after quarter since the beginning of 2025, and that tells us the region is gradually working through the wave of supply that came out of the post-COVID construction boom.\u201d<\/em><\/strong><\/p>\n<p>The region recorded 3.27 million square feet of positive net absorption in Q1 and just over 8.5 million square feet of leasing activity, reflecting real, though selective, occupier demand. While leasing volume came in below the prior quarter and the long-term quarterly average, it was still enough to support positive absorption and a further decline in vacancy.<\/p>\n<p>Class A product again led the market\u2019s recovery. The report shows Class A vacancy at 10.93%, with 5.45 million square feet of positive net absorption in Q1 and 17.46 million square feet absorbed over the past 12 months. As the dominant asset class in the region\u2019s industrial inventory, Class A performance remains a major driver of the overall market\u2019s improvement.<\/p>\n<p>Even with those gains, the report cautions that the recovery is still uneven. Availability remains well above vacancy, and while sublease space pulled back slightly in Q1 to 13.4 million square feet, total sublease volume remains elevated after several years of steady growth. That gap between available and vacant space suggests some additional movement could still be ahead depending on tenant behavior over the next several quarters.<\/p>\n<p><strong><em>\u201cMarket fundamentals are getting stronger, but we\u2019re not completely in the clear yet,\u201d<\/em><\/strong> Kreiger said. <strong><em>\u201cThe market is improving, but there is still a meaningful amount of dark space and near-term availability that could affect vacancy over the next six months. This is a better market than it was a year ago, but it is still a market that needs to be watched carefully.\u201d<\/em><\/strong><\/p>\n<p>The report also points to a significant slowdown in new construction as a positive force behind the market\u2019s stabilization. The active construction pipeline fell to 18.1 million square feet, one of the lowest levels seen in the past five years. That pullback has reduced the amount of new speculative space being added to the market and helped existing vacancy begin to normalize. The active pipeline remains heavily speculative, with 81% of projects under construction built on spec.<\/p>\n<p>Most near-term speculative supply risk remains concentrated in Central Pennsylvania and Northeastern Pennsylvania, which account for the largest share of active construction. At the same time, the broader development pipeline remains substantial at nearly 214 million square feet, underscoring long-term confidence in Eastern Pennsylvania and surrounding logistics corridors as one of the country\u2019s most important industrial regions.<\/p>\n<p>The report also notes a shift in the shape of tenant demand. While cross-dock, big-box logistics buildings still dominate the development pipeline, more recent occupier activity has increasingly shown up in buildings under 250,000 square feet, reflecting a market that is broadening beyond only the largest-format users.<\/p>\n<p>Submarket performance in Q1 was mixed. <strong>Central Pennsylvania<\/strong> posted softer headline fundamentals but saw strong leasing activity beneath the surface. <strong>Lehigh Valley<\/strong> showed improving market conditions, with vacancy declining to 7.40% from 8.73% and availability also moving lower, though net absorption was effectively flat. <strong>Northeastern Pennsylvania<\/strong> saw vacancy edge higher as nearly 1.8 million square feet of new speculative product delivered vacant, though the market still posted positive absorption. <strong>Southern New Jersey <\/strong>continued to improve with strong positive absorption.<strong> Metro Philadelphia <\/strong>remained a higher-vacancy market but showed improving conditions and active leasing. <strong>Delaware<\/strong> remained relatively steady, with small occupier shifts continuing to have an outsized effect due to the market\u2019s size.<\/p>\n<p>Looking ahead, Lee &amp; Associates said the market should be watched most closely for the pace of new availabilities hitting the market and whether sublease volume continues to decline.<\/p>\n<p><strong><em>\u201cThis quarter was another step forward,\u201d<\/em><\/strong> Kreiger said. \u201c<strong><em>The market is getting better, but the real story is that recovery is happening unevenly and with more discipline than we\u2019ve seen in recent years.\u201d<\/em><\/strong><\/p>\n<p>For more information or to request the full Q1 2026 Eastern PA Industrial Market Report, contact Lee &amp; Associates of Eastern Pennsylvania.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>About the Q1 2026 Industrial Intel Report<\/strong><\/p>\n<p><em>The Lee &amp; Associates Industrial Intel Report is a quarterly analysis of industrial market performance across 43 counties in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, and West Virginia. The report tracks over 675 million square feet of inventory in Eastern Pennsylvania alone, focusing on leasing activity, vacancy trends, construction, and development.<\/em><\/p>\n<p><strong>About Lee &amp; Associates of Eastern PA<\/strong><\/p>\n<p><em>Lee &amp; Associates is a full-service commercial real estate firm with offices in Mechanicsburg, Plymouth Meeting, &amp; Pittsburgh PA. The firm\u2019s Research division provides deep market intelligence and custom analytics across key industrial submarkets in the Northeast and Mid-Atlantic.<\/em><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Media Contact:<\/strong><\/p>\n<p>Heather Kreiger, CCIM<\/p>\n<p>Principal and Regional Research &amp; Marketing Director for the Lee Pennsylvania offices<\/p>\n<p>hkreiger@lee-associates.com | 610.590.1007<\/p>\n<\/div>\n<\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>MECHANICSBURG, PA. April 14, 2026 \u2014 Lee &amp; Associates of Eastern Pennsylvania reported continued improvement across the Greater Philadelphia region industrial market in the first quarter of 2026, as vacancy declined to 8.44%, positive absorption continued, and a more disciplined construction pipeline helped ease pressure from the post-COVID development cycle. The Q1 report tracks the region\u2019s six primary submarkets: Central Pennsylvania, Lehigh Valley, Northeastern Pennsylvania, Metro Philadelphia, Southern New Jersey, and Delaware. According to the&#8230;<\/p>\n","protected":false},"author":229,"featured_media":8725,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1212],"tags":[],"class_list":["post-8724","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-research"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.7 (Yoast SEO v28.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Eastern PA Industrial Market Continued to Stabilize in Q1 as Vacancy Declined and Leasing Activity Remained Active - Eastern Pennsylvania<\/title>\n<meta name=\"description\" content=\"Lee &amp; Associates of Eastern Pennsylvania reported continued improvement across the Greater Philadelphia region industrial market in the first quarter of 2026, as vacancy declined to 8.44%, positive absorption continued, and a more disciplined 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