Healthy Fundamentals at Mid-Year Mark for the Greater Philadelphia and I-81/78 Corridor Industrial Markets

Philadelphia, PA (July 18, 2016) — Newmark Grubb Knight Frank (NGKF) released its second-quarter 2016 industrial reports for Greater Philadelphia and the I-81/78 Corridor this week. The reports detail another quarter of robust growth in both supply and demand for each market. Both regions realized eight-year records this quarter; vacancy dropped within the Greater Philadelphia market to the lowest point since 2008, and rent appreciation in the I-81/78 Corridor brought pricing to parity with pre-recession levels.

In the Greater Philadelphia region, overall vacancy fell 10 basis points from the previous quarter to 8.2 percent, due to 1.7 million square feet of new occupancy outpacing construction deliveries. In keeping with the general pattern of tenancy growth distribution throughout the region, the lion’s share of demand was attributed to warehouse space, while flex space experienced moderate gains and manufacturing space suffered slight losses. Southern New Jersey’s robust industrial market accounted for nearly 70 percent of the total net absorption this quarter. The most notable move-in was H&M, which occupied its new 739,315-square-foot built-to-suit facility at 1600 River Road, located in Burlington County. NGKF Senior Managing Director Kurt Montagano noted that, “Strong demand growth from the retail sector, both traditional and e-commerce, as well as third-party logistics companies that frequently support retailers, will continue to fuel the momentum of Southern New Jersey’s industrial market.” Indeed, in the latter half of the year, Amazon will occupy the 613,920-square-foot warehouse at 309 Cedar Lane, which was delivered this quarter, and W.W. Grainger will move into its 1.2-million-square-foot facility at 400 Bordentown Hedding Road, after construction is completed next quarter. These occupancies will mitigate the one notable retraction from the region this year. “The Sports Authority bankruptcy will likely lead to adding 416,000 square feet of space to the Southern New Jersey market once its liquidation is complete,” said Montagano.

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