A second-quarter report from the commercial real estate firm Newmark detected no signs of a slowdown in the industrial real estate market.
Activity in the Greater Philadelphia industrial market, southeastern Pennsylvania, southern New Jersey, and Delaware remains robust.
According to Newmark, there is currently 22.6 million square feet under construction, 84% of which is being developed on speculation. Fuel prices are playing a role, with tenants looking for distribution sites that are closer to their customers.
Delaware distribution centers can serve a market of 30 million people.
The Delaware industrial market’s vacancy rate declined by 10 basis points since the first quarter to 1.1%, Newmark reported.
Of all the tracked industrial markets and submarkets in the Philadelphia region, New Castle County is currently exhibiting the highest occupancy rate, particularly for warehouse and distribution space.
There is a growing need for additional space to be constructed, with Newmark expecting ground breakings over the next six to 12 months. One hotspot is Middletown in New Castle County, which has “spec” distribution center projects moving through the approval process.
Asking rental rates for warehouse and distribution space declined by 6.5% since last quarter to a current rate of $6.10 a square foot. Year-to-date absorption totaled 1.6 million square feet, mainly due to to Amazon’s 1.3-million- square-foot building completion at 780 South DuPont Highway in New Castle during the first quarter.
Smaller tenants are also leasing space in Delaware, one example being garden equipment maker Snow Joe.
The overall vacancy rate in the region declined to 3.7%, down 40 basis points from 4.1% recorded last quarter. Every submarket in the Greater Philadelphia industrial market is currently over 94.0% occupied.
Newmark has an office in Wilmington.