By Brenda Nguyen CoStar Analytics
Bucking the national trend, Philadelphia's industrial development saw a resurgence in construction levels in recent quarters. After falling to a three-year low at the end of 2023, the region's active pipeline of industrial construction has spiked by 28% since then.
As of the third quarter of this year, more than 17.3 million square feet across 55 industrial buildings is under construction in the Philadelphia metropolitan area—up from 13.5 million square feet at the end of 2023. Southern New Jersey, which encompasses Burlington, Camden, Gloucester and Salem counties, accounts for over 45% of the region's total industrial construction level.
Notably, Salem County now leads the Philadelphia region in industrial development activity with a total of 4.4 million square feet underway—the only locality with more than 1 million square feet under construction. Given the relatively small size of the existing industrial space market in Salem County, the current construction level amounts to an astounding 47% increase in the county's local inventory.
This surge comes as neighboring Burlington County, a former leader in industrial development, has seen construction activity slow in reaction to the large amount of speculative space that remains available for lease.
The latest uptick in industrial construction comes as availability has increased by 3.8 percentage points across the region since January 2020 following the completion of over 50 million square feet of industrial space. As of September, the availability rate for industrial space in the Philadelphia region was 10.4%, well above the national average availability rate of 9%.
Another wave of industrial development may be on the horizon. Developers have proposed building more than 75 million square feet across 250 buildings. Salem County in New Jersey, New Castle County in Delaware and Bucks County in Pennsylvania have the highest concentration of proposed projects, each with over 10 million square feet of proposed development.
While not all the proposed projects are expected to move forward, the sheer volume of projects indicates that developers remain bullish on the Philadelphia region for future industrial demand.
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