Tuesday, July 5, 2011

PA warehouse rentals up; burb offices still weak

by Joseph N. DiStefano

"The big job payoff from Gov. Corbett's kindness to his natural gas developer pals may still be years in the future - if ever - but industrial spaces are filling back up in eastern Pennsylvania - America's Warehouse - thanks to a revival of import and export trade, according to new data.

That's good news for warehouse workers and truck drivers who haul imports to stores and exports from factories. But office leasing is still slow.

Philadelphia-area warehouse and other industrial vacancies have fallen to 8.6%, down from over 9% last winter, as wholesalers leased back nearly 2 million sq ft that went empty during the 2008 recession. That's a "welcome trend," but the Federal Reserve Bank of Philadelphia has warned, as he puts it, that "a slowing of manufacturing activity in the region may portend stalled occupancy" this fall.

Up in the Easton-to-Chambersburg I-81/I-78 corridor - the freeway alternative to the tollboths of the Pennsylvania Turnpike and I-95, thank you federal taxpayers - industrial vacancies dropped to 9.4% from 9.8% in the winter. As in the Philadelphia area, wholesale importers and exporters took more space.

But that's still not enough to encourage new construction, except up at developer Rob Mericle's speculative CenterPoint Commerce & Trade Park in Pittston. As in PA, South Jersey and Wilmington-area industrial vacancies have also fallen, to around 10%.

The office market is weaker. Center City Philadelphia is the bright (or less-bad) spot: vacancy is down to 14%, from 15% late last year, but still way above the sub-10% brokers measured way back in 2007.

Out in the burbs things are worse: In the PA suburbs vacancy edged up to nearly 18% as drug companies cut back. Tenants are still demanding deep concessions, especially up in Bucks and central Montgomery counties. South Jersey vacancies slipped just below 18%, though banks and other financial companies have started to add space again. Down in New Castle County, vacancies are still rising toward 18%, and likely to go higher as Wilmington Trust's new owner, M&T Bank, prepares to lay off redundant headquarters workers."


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