By Brenda Nguyen CoStar Analytics
After two years of supercharged development, Philadelphia's industrial construction boom has finally leveled off. The slowdown has helped demand catch up with supply, reducing the number of unoccupied warehouses across the metropolitan area.
Developers added over 57 million square feet of new industrial space across the Philadelphia metropolitan area since 2020, one of the largest market expansions nationwide. Four counties in Southern New Jersey, Burlington, Camden, Gloucester and Salem, accounted for more than half of this regional expansion.
The construction spree pushed Philadelphia’s availability rate for industrial space from a low of 6.2% in 2022 to a peak of 10.6% in mid-2024. Consequently, landlords found it harder than expected to secure tenants due to the increased competition and slower leasing activity in recent years.
The market has since turned a corner. The availability rate has dropped by 40 basis points to 10.2% in June, suggesting that tenant demand is finally catching up to the slower pace of new supply. Available inventory now totals 66 million square feet, an increase of 72% from 38.3 million square feet three years ago.
With construction activity moderating, Philadelphia's industrial market appears positioned for a more balanced year ahead. Landlords should find some relief as they face fewer new competitive properties hitting the market compared to the pace set over the past several years.
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