Warehouse is the New Retail
- The regional vacancy rate decreased from 7.43 to 7.33 percent during the first two quarters of 2016.
- Net absorption totaled over 10.2 million square feet, surpassing last year’s six month total.
- Asking rents increased by 1.5 percent from the end of 2015, due in large part to the impact of new construction.
- Two-thirds of the 11.8 million square feet under construction was speculative.
- There were fewer investment-grade sales, but there were high-watermark prices achieved in a few submarkets.
The regional industrial market had a strong performance during the first two quarters. Vacancy decreased despite the completion of 8.1 million square feet of speculative construction and the shutdown of three larger manufacturing facilites in Chester, Montgomery, and Lehigh counties.
Over 50 percent of the new speculative space was leased prior to or shortly after completion. The speculative buildings over 800,000 square feet have had a longer lease up time. Due to the complexities of site selection, occupiers generally delay the final building decision as long as possible and then expect quick occupancy and operation. There are prospects for these larger buildings but an anticipated time delay for lease commitment is common.