Q2 2024 Philadelphia Industrial Market Report

During the second quarter, Philadelphia’s industrial market showed resilience, sustained by its strategic location, robust economy, skilled workforce, and ongoing infrastructure investments. Second quarter warehouse leasing in Greater Philadelphia softened after reaching unprecedented levels in recent years. The latest annual leasing volume of 19.5 million square feet reflects a 28 percent decrease from 2022 levels. Despite this decline, industrial leasing activity has stabilized around historical norms.

Burlington County registered 3 million square feet of annual net absorption, followed by Bucks County with 1.1 million square feet. Overall, there has been a slowdown in leases exceeding 500,000 square feet over the past year, reverting to long-term norms. Lehigh Valley showed negative absorption of -1.4 million square feet, however, when Berks County is excluded from the results, Core Lehigh Valley is experiencing tight supply dynamics. Specifically, suites under 100,000 square feet have low vacancy and continue to see strong rate increases. On the 1 million square foot + end of the spectrum, the core Lehigh Valley only has two available buildings and two buildings in the development pipeline for bulk distribution.

Across the region, small-bay warehouses below 50,000 square feet remain in high demand with a tight 3.5 percent vacancy rate, contrasting with warehouses exceeding 500,000 square feet that have seen vacancy rates rise to 13.5 percent in the second quarter of 2024.

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