New supply sits unleased as occupier demand weakens
Occupier demand, particularly from e-commerce and retailers, weakened along with consumer spending, hindering the removal of new inventory from the market. In the Philadelphia region, 1.7 million square feet (msf) of new warehouse space delivered in the second quarter compared to the almost 5.0 msf completed in the second quarter of 2023. Construction starts slowed with only 14.8 msf under construction compared to 20.5 msf at mid-year 2023.
The Philadelphia metro industrial market reported a 40-basis-point (bps) uptick in vacancy, ending the second quarter at 8.4%. The Southeast PA submarket’s vacancy increased 70 bps, quarter over quarter, to 7.5%. Southern NJ’s vacancy rate remained flat at 10.4%. However, the Northern DE submarket’s vacancy rate decreased 60 bps to 6.1%