Q3 2021 Philadelphia Industrial Market Report

The Philadelphia Regional Industrial Market experienced several trends consistent throughout each individual submarket including record breaking absorption, low vacancy rates and active construction levels. These trends put the market on a  trajectory for the strongest year ever.

Throughout the third quarter, the Philadelphia Region recorded nearly three times the net absorption as the previous quarter  with 23.9 MSF quarterly absorption.

Strong quarterly and YTD absorption has caused vacancy levels to drop to historic lows. Overall market vacancy stands at 2.74%, down 165 bps from Q2’21 and 376 bps YTD.

Rolling Construction increased to 44.8 MSF, with 16.0 MSF of new construction brought to delivery. Despite strong construction levels, expect continued low vacancy rates due to high demand and more robust pre-leasing as occupiers must look to active construction projects to meet their needs.

As we look forward to Q4’21 , expect net absorption to be kept in check only by available inventory including new deliveries. As a result (and combined with increasing construction costs), market rents are poised for their fastest growth in years or perhaps ever over the next 12 months.

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