Philadelphia, PA — November 7, 2024 — Lee & Associates of Eastern Pennsylvania has released its Q3 2024 Industrial Market Report, highlighting robust activity and notable trends across key submarkets in Eastern Pennsylvania. The region continues to demonstrate resilience with steady leasing activity, increased construction deliveries, and a balanced development pipeline.

Key Highlights from Q3 2024:

• Declining Vacancy Rates Driven by Class A and B Leasing
  The Philadelphia region saw a 23-basis point drop in vacancy, bringing the overall rate to 6.90%, now below structural levels. Strong leasing activity in Class A and B properties led to positive net absorption after two consecutive quarters of negative figures, reinforcing demand for premium industrial space.
• Robust Construction Activity and Pipeline Expansion
  Nearly 6.8 million square feet of new industrial space was delivered in Q3 2024, a 34% increase from Q2, with an additional 14 million square feet anticipated by year-end. The surge in construction activity signals continued investor and developer confidence, particularly in high-demand areas like Northeast PA, which holds the largest development pipeline.
• Submarket Performance Reflects Varied Dynamics
  • Central PA: Central Pennsylvania’s vacancy rate increased slightly to 5.33%, but the submarket showed strong leasing momentum with nearly 1.3 million square feet of positive net absorption. The construction pipeline also remained active, with 2 million square feet delivered (44% pre-leased) and 2.6 million square feet in new starts this quarter.
  • Lehigh Valley: The Lehigh Valley submarket experienced a 61-basis point drop in vacancy to 6.69%, below structural levels. This improvement was driven by significant leasing, including a 1-million-square-foot lease at East Valley Logistics Park in Northampton County. Positive net absorption totaled 1.5 million square feet, underscoring the submarket’s appeal.
  • Northeast PA: Vacancy in Northeastern Pennsylvania rose from 4.11% to 5.0%, with modest net absorption of just over 28,000 square feet. This increase was partly due to limited new leasing activity and no new construction starts, though the submarket saw one large delivery exceeding 1 million square feet.
  • Southern New Jersey: Strong demand in Southern New Jersey led to a notable 103-basis point reduction in vacancy, with 3.7 million square feet in new leases signed. The submarket also benefited from 2.5 million square feet of new speculative construction deliveries, with an additional 5 million square feet expected by year-end.
  • Philadelphia Metro: The Philadelphia Metro area recorded its first vacancy rate drop since Q3 2022, now below 10%. Positive net absorption totaled over 434,000 square feet, supported by increases in both the construction and pre-construction pipelines, suggesting continued market health and demand.
  • Delaware: Delaware’s vacancy dipped below 5% for the second time this year, with positive absorption just over 190,000 square feet. While construction activity remained relatively low, Delaware’s pre-construction pipeline grew to just over 11.3 million square feet, indicating anticipated growth in the coming quarters.

Heather Kreiger, CCIM, Regional Research Director at Lee & Associates, noted, “The Eastern Pennsylvania industrial market continues to show resilience, with strong leasing demand across high-quality assets and a steady influx of new developments. As vacancy rates stabilize and leasing activity remains robust, the region is well-positioned to meet evolving tenant needs across sectors.”

For a detailed look at submarket insights and trends, the full Q3 2024 Industrial Market Report is available upon request.

 

About Lee & Associates:

Lee & Associates of Eastern Pennsylvania LLC is the leading commercial brokerage and asset service provider specializing in the Greater Philadelphia Region's industrial, office, retail, land, and investment sectors. We influence the market across the region, including the Lehigh Valley, Central Pennsylvania, Northeastern PA, Philadelphia, Southern New Jersey, and Delaware. Our offices in Central PA and Suburban Philadelphia became part of the Lee & Associates national network in 2015, and we expanded our operations to  Western Pennsylvania in 2023, further cementing our position as the top player in the industry. With solid local ownership and a robust platform, our nationwide Lee & Associates offices continue to set new standards of excellence and growth.

At Lee & Associates of Eastern Pennsylvania LLC, we are the leaders in commercial real estate. Our services include expert guidance in buying, selling, and leasing commercial properties and property management. Our team will work tirelessly to maximize your returns. Our tailored strategies will help your company achieve its occupancy and financial goals.

Our reliable and responsive team puts your needs first in every interaction. We communicate effectively to understand your requirements and provide the best possible solutions. Choose us to be your partner in commercial real estate and discover why we stand out among other industrial real estate companies.

 

For more detailed information and analysis, please contact us for a copy of the full Q3 2024 Industrial Intel report.

Heather Kreiger, CCIM
Regional Research Director - Lee & Associates of  Pennsylvania
610.590.1007
hkreiger@lee-associates.com