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Market Report

Philadelphia Industrial Investment Forecast

2019 Outlook

Span of Robust Absorption Extends; Investors Target Warehouses Along Major Transportation Routes

 

Stout market demand for strategically located space exists throughout the metro. Philadelphia’s extensive transportation network and proximity to other major East Coast markets makes it a prime locale for retailers and logistics firms focused on optimizing supply chains in order to provide same- or next-day deliveries. Recent expansions by these industrial users supported the absorption of 34 million square feet over the past four years, negating the delivery of 20 million square feet of space and reducing metro vacancy to the low-5 percent band. Facilities along the New Jersey Turnpike have been coveted of late, with more than 5 million square feet absorbed last year in Southern New Jersey counties. Declining availability within these markets during 2019 will force more industrial users to look across the Delaware River to Philadelphia and Montgomery counties, where vacancy rates rest just above the metro’s average. A boost in leasing velocity in these areas allows metro vacancy to reach a cyclically low level, prompting additional speculative construction proposals.

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