Philadelphia Businesses Are Snatching Up Class A Spaces
Philadelphia real estate is in great demand; both large and small units are being leased quicker than replacement stock can be constructed. Vacancies are declining and rental rates are increasing, and all of the activity has boosted construction in the city. The actual vacancy percentage in the Philadelphia market declined 8.5 percent.
After 3.0 million square feet of space was snatched up by tenants in the third quarter, there is still 32.8 million square feet of active tenant demand in the industrial market in Philadelphia, according to Jones Lang LaSalle IP, Inc. This has left very little Class A space available for rent. There are only four Class A spaces that exist with over 500,000 square feet available in the market.
Several large companies, such as Amazon.com, Zulily.com, Lindt Chocolate, Georgia Pacific, and many others have signed leases on property in the Philadelphia area. Other large corporations are breaking ground on new construction sites, with several speculative buildings in the development phase.
3PL, food and beverage and e-commerce are playing a major role in market activity. Manufacturing and consumer goods are also a driving force in the market.
Several leases were signed during the third quarter, and construction in the Philadelphia market totals 12.6 million square feet to date and is expected to continue to grow. With the short supply of Class A availability, there will be more of a focus on Class B assets.
Class A units are projected to rise through the end of the year in the Philadelphia market. Due to the high demand, quality construction materials are in demand, rental rates are up, and Class B units are under consideration.
Christina Thompson is a freelance writer living in Philadelphia. Her work can be found at Examiner.com.
