Commercial brokers Newmark and Colliers reported virtually full occupancy in the industrial market as developers add “spec” projects.
Spec refers to structures that are built in anticipation of tenants signing leases.
New Castle County’s vacancy rate remained below 2% for 2022, ending the fourth quarter at 1.2%, Colliers reported.
According to Newmark, New Castle County posted a 99% occupancy rate at the end of 2022. In contrast, the overall vacancy rate for industrial space was at 1.9% at the end of 2021.
Colliers noted the low supply has resulted in an increase of new construction. Build-to-suit projects were underway for Wu-Xi STA pharmaceutical site in Middletown, PODS at Delaware River Industrial Park, and DuPont electronics at First State Logistics Par, Glasgow. Logistics Property Company also commenced work on two speculative buildings in that park near I-95.
Newmark reported year-to-date positive absorption totaled 1.6 million square feet, primarily due to the completion of Amazon’s 1.3-million-square-foot building at 780 South Dupont Highway, New Castle, in early 2022.
The weighted average asking rent dipped during the 4th quarter, but this was due to the absorption of higher rent space. The average rent was up 48.3% from 2021, the highest year-over-year gain in the region.
Newmark reported the northern Delaware market saw 1.4 million square feet of new construction break ground in the fourth quarter that will help meet the demand for warehouse-logistics space.
According to Colliers, the vacancy in the region’s industrial market decreased steadily during 2022 despite signals that the pace of demand was cooling in 2021.
Absorption did slow down in the fourth quarter due to a market-wide lack of supply in most size ranges and slower lease up of the speculative buildings that were delivered.
The average time from the commencement of construction to lease signing has increased; however, this is seen as a return to a more historically standard level rather than sliding demand, Colliers reported.
Newmark stated that the occupancy rate across all tracked markets and submarkets in the Delaware Valley remained above 96%.
In northern Delaware, Amazon completed a massive expansion as signs pointed to a slowdown at the company after adding milliions of square feet in recent years. A distribution site near Delaware City with Amazon’s color scheme remains vacant.