Philadelphia Industrial Market Report

Market contends with the tail-end of supply wave. Inventory growth remains well over historical norms, propelled by a batch of large-scale speculative warehouses underway, each in excess of 250,000 square feet. These deliveries will drive the amount of vacant space metrowide to almost 40 million square feet by the end of the year, a near two-decade high, and send marketed rates on a downward trajectory. Suburban environs that have witnessed the most rapid supply growth in recent years, such as Bucks and Burlington counties, could see the most whiplash in this metric. As more speculative builds come online this year, market forces may dictate lower asking rates. On a positive note, however, the delivery schedule narrows substantially after the end of this year, helping the market integrate incoming supply in 2025. Increasing political pushback in some suburban locales could also stifle further development, particularly in more affluent municipalities along the New Jersey Turnpike that have increasingly moved to veto new warehouse projects.