Activity proved consistent throughout the greater Philadelphia industrial market during the second quarter as occupancy grew by another 280,000 square feet, according to Newmark Grubb Knight Frank’s Q2 2013 Greater Philadelphia Area industrial research report. Current conditions place this market somewhere between recovery and expansion. The lack of speculative development and sale prices stagnating below replacement cost exclude it from the latter and vacancy below equilibrium places it outside the former. In the long term, steady demand growth should reduce existing supply levels and raise lease prices enough to warrant speculative construction, therefore, growing the market.
The trend of user-buyers taking advantage of current market conditions was evidenced by robust user-sale activity. At current price-per-square-foot valuations, users are able to acquire buildings at lower price points than lease deals. Over 1.5 million square feet of user deals took place in the second quarter alone averaging $47.50/SF.
Key statistics for the greater Philadelphia industrial market during the second quarter of 2013 are as follows:
• Vacancy Rate: 9.4%
• Absorption: 278,775 Square Feet
• Average Asking Rent: $4.90/SF NNN
• Warehouse/Distribution Asking Rent: $4.14/SF NNN
• R&D/flex Asking Rent: $7.40/SF NNN
Looking forward, while manufacturing activity seems to have stalled, consumer confidence and spending underscore the perception of a more stable economy. This will bode well for warehouse landlords in the short term. Furthermore, as shale operations push energy costs lower inside U.S. borders; expect more manufacturing operations to return, creating more stable, albeit modest demand for manufacturing-space over the long term.
To access the full report, visit www.ngkf.com/research.
To speak with a local market expert, please contact Mira Matic at email@example.com.
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With roots dating back to 1929, NGKF’s strong foundation makes it one of the most trusted names in commercial real estate. Its integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, NGKF serves the local and global property requirements of tenants, landlords, investors and developers worldwide. For further information, visit www.newmarkkf.com.
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