Smaller lease deals drive Central Pennsylvania’s core industrial market

 By Brenda Nguyen CoStar Analytics

Industrial space availability trends across South Central Pennsylvania— spanning Harrisburg, Lancaster, York, Reading, Lebanon and Gettysburg—reveal a growing disconnect between development patterns and tenant demand.

Developers continue to build big facilities geared for single users, but tenants are leasing small-bay facilities, creating uneven market conditions across building size segments.

Small-bay industrial properties, those measuring under 50,000 square feet, remain the most in-demand segment, with availability holding near 3.5% in 2026. Industrial buildings measuring between 50,000 and 100,000 square feet also show tight conditions, with availability at 4.5%. Limited new construction in these two size categories, combined with steady demand from local and regional users, continues to support lower vacancy rates.

Over the past three years, approximately 530 industrial leases were signed in this six-county region, with 88%, or about 470 leases, signed for spaces smaller than 100,000 square feet. This sustained demand has kept vacancy compressed in smaller formats, even as overall supply has expanded.

Availability rises sharply with building size. Mid-sized industrial properties, those between 100,000 and 249,999 square feet, have availability above 10%, while availability in buildings between 250,000 and 499,999 square feet has reached approximately 12.3%.

Buildings larger than 500,000 square feet now have the most availability, at roughly 13.7% in mid-2026, surpassing the 250,000 to 499,999 square foot segment in recent quarters.

Although large leases often dominate headlines, they account for a small share of actual demand. Over the same three-year period, only 13 leases, about 2.5% of total transactions, exceeded 500,000 square feet. These large-block leases tend to occur irregularly, creating sharp swings in vacancy when they are signed or when a building in this size quotient is delivered vacant.

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