Philadelphia’s big-box industrial leasing activity climbs to a five-year high

By Brenda Nguyen CoStar Analytics

Big-box industrial leasing appears to be gaining momentum across the Philadelphia market, with the number of lease deals climbing steadily from the cyclical low seen in 2023.

The rebound in leasing signals an inflection point, as well-capitalized occupiers regain confidence in their business operations following a stretch of higher interest rates, recessionary fears and broader economic uncertainty that froze expansion plans.

After bottoming out at just two new leases above 500,000 square feet in 2023, Philadelphia recorded five such deals in 2024 and accelerated to eight in 2025. The pace has carried into 2026, with nine such leases signed over the trailing 12 months, matching the prior peak in 2021.

Recent deals highlight returning demand at the top of the market, particularly for first-generation and build-to-suit space. DrinkPAK's 1.4 million-square-foot lease at the Bellwether District in South Philadelphia ranks among the largest in the Philadelphia market's history, anchoring a major redevelopment and reinforcing the region's manufacturing and logistics appeal.

Other major bulk-industrial deals include Exol's lease of the South Penn Logistics Center, a 973,200-square-foot, newly built distribution facility in Bucks County, while Creative Innovation's 704,000-square-foot deal in Palmyra and SLM Warehousing's full-building, 610,183-square-foot lease in Mansfield further highlight continued leasing momentum across Southern New Jersey's logistics corridor.

These leases have considerably tightened conditions at the top end of the market, compressing big-box vacancy from a peak of 14.8% in mid-2025 to 11.2% in mid-2026. Small-bay industrial space, by contrast, has trended in the opposite direction, with a gradual increase in vacancy.

The divergence between big-box and small-bay performance suggests a bifurcated market.

Larger, well-capitalized occupiers of industrial space have the balance sheets to expand opportunistically, while smaller operators—working with thinner margins and less financial cushion—are struggling to absorb softer consumer spending, higher operating costs and elevated borrowing expenses. The result is a market moving at two distinct speeds—accelerating at the top end while smaller operators tread more cautiously.

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