Philadelphia Industrial Investment Forecast
Unprecedented Demand Surge Prompts Historic Supply Wave Across the Philadelphia Metro
Net absorption soars to record high. The need for space to distribute the growing number of retail goods sold online coupled with the metro's proximity to other major East Coast markets is bolstering industrial demand in Philadelphia. Additionally the Port of Philadelphia saw double-digit growth in container volume break bulk cargo and overall port tonnage last year further strengthening the need for space in the metro. Leasing activity skyrocketed with firms taking 15.5 million square feet off the market in 2021 — the largest demand spike in over two decades. Facilities in Northern Delaware and Southern New Jersey have been coveted as of late accounting for roughly two-thirds of all absorption over the past year. Developers have responded to this recent surge in demand by elevating construction activity across the metro. Supply additions for 2022 are expected to reach the highest volume this century with only 30 percent of the pipeline pre-leased entering this year. The boost in speculative supply will place upward pressure on vacancy; the rate however will remain 170 basis points below the trailing 10-year average.