Warehouse Rents Rise with Increased Demand

Philadelphia, PA (April 12, 2017) — Newmark Grubb Knight Frank (NGKF) released its first-quarter 2017 reports for the Greater Philadelphia region and the I-81/78 Corridor industrial markets this week. The two markets experienced a decline in overall vacancy, propelled by demand within the warehouse/distribution sector. Overall, occupancy gains were positive with increased activity from e-commerce and logistics firms. The I/81-78 Corridor continued to capture the majority of the construction pipeline.

Greater Philadelphia’s industrial market closed the first 90 days of the year with 2.2 million square feet in positive absorption. Vacancy fell 40 basis points from year-end 2016 and 120 basis points from one year ago. The Southern New Jersey market accounted for 2.1 million square feet in occupancy gains. The Burlington and Gloucester County submarkets contributed 1.4 million square feet and 515,252 square feet of positive absorption, respectively. Vacancy in Southern New Jersey’s warehouse sector reached a record-low 2.9 percent in the first quarter of the year. Kurt Montagano, NGKF senior managing director stated, “The extremely tight warehouse market propelled rent growth for Class A warehouse buildings over the last few quarters, but we are now seeing a trickle-down effect with rents increasing for Class B warehouses.”

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