New Warehouse Deliveries Drive Absorption Gains

Philadelphia, PA (October 16, 2017) — Newmark Knight Frank (NKF) released its third-quarter 2017 reports for the Greater Philadelphia region and the I-81/78 Corridor industrial markets this week. Greater Philadelphia’s industrial market, including I-81/78, closed the third quarter of the year with just shy of two million square feet in positive absorption. Quarter-over-quarter the vacancy rate rose 30 basis points to 6.9 percent, and the market, especially in the Southern Pennsylvania region, remains extremely tight. Several warehouse buildings also delivered: three in the Southern New Jersey market totaling 2.2 million square feet, and four in the I-81/78 Corridor market totaling 2.1 million square feet. The I-81/78 Corridor continued to capture the majority of the construction pipeline.

The Southern New Jersey market recorded 1.5 million square feet in positive absorption. Specifically, the Gloucester County submarket contributed the bulk of the gains with 1,037,511 square feet, as Amazon occupied 1,181,240 square feet at a newly delivered building at 2651 Oldman’s Creek Road. Despite the Amazon move, vacancy in the Southern New Jersey warehouse/distribution market increased for the first time since fourth-quarter 2016, rising 70 basis points to end at 3.8 percent. The rise in vacancy is mainly attributed to 302,400 square feet of space vacated at 200 Arlington Boulevard. The rate remains among the lowest in recent years. Kurt Montagano, NKF senior managing director stated, “While vacancy for warehouse buildings rose slightly, rents rose as well. The warehouse and distribution market in Southern New Jersey remains very active.”

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