Q1 2023: Philadelphia Industrial Market Report
Greater Philadelphia is one of the fastest-growing industrial markets, with vacancy of 4.5 percent. Large leases and user purchases transacted across the market from varying sectors. Speculative warehouse construction remained robust on in-flight projects. However, developers slowed construction starts and land acquisitions during the quarter as the broader market monitored macroeconomic trends. The Port of NY/NJ experienced increased imports versus the west coast ports, which also lead to increased space requirements. There is a dearth of suites/buildings under 100,000 square feet across the market, as developers have focused on larger projects to maximize returns. As such, landlords have maximum leverage on pricing power and terms on smaller suites, whereas tenants have more leverage on larger buildings (e.g. 250,000 square feet and above). The Lower I-81 corridor, which has traditionally experienced lower leasing velocity, had several large format speculative projects come online. In particular, the inventory of available Class A space in metro Philadelphia is minimal. Sublease availability is elevated across all markets, including new availabilities in under-utilized Amazon-leased buildings.