Newmark Real Estate (Newmark) is pleased to release its first quarter 2022 Greater Philadelphia (inclusive of Southeastern Pennsylvania, Southern New Jersey and Deleware) and I81/78 Corridor industrial market reports.
Activity in the Greater Philadelphia industrial market, inclusive of Southeastern Pennsylvania, Southern New Jersey and Delaware, remains strong. E-commerce sales and robust consumer spending continues to drive the need for warehouse space. Building values continue to escalate, as a significant amount of capital is focused on the industrial sector compared to other commercial product types. The cost of land also continues to soar to record heights, which has not deterred developers and tenants from purchasing land for new warehouse facilities. Due to land constraints, particularly in the Southern New Jersey industrial market, tenants are less focused on cost and more on securing the right land option to suit their requirements. While rising fuel prices have not yet dissuaded local tenants from taking warehouse and distribution space, companies are becoming more conscious of possible disruptions in the supply chain. One concern has been the shortage of available labor, which has prompted an increasing number of companies to evaluate machine automation as a means of improving output.
As a result of hearty demand and soaring occupancy rates in the I-81/78 industrial market, landlords have been able to ink deals at record-high rental rates with annual increases of over 3.0% for longer-term transactions. Land pricing has also reached record highs as tenants are less focused on cost and more on obtaining the right land option to suit their requirements. Even the current elevated gas prices have not curbed demand for warehouse and distribution product. The largest challenge for warehouse occupiers in the I-81/78 industrial market has been a shortage of workers. As the cost of labor continues to rise, automation has become a realistic option for tenants.