After a period of nearly zero vacancy rates, the New Castle County industrial real estate market saw the empty space figure rise to 6.4%. That’s according to a report from the real estate services firm CBRE.
Delaware has seen a boom in warehouse construction in recent years. The 6.4% rate was still lower than the 7.7% in the Delaware Valley.
At the end of 2023, New Castle County had about 800,000 square feet of industrial space under construction, with 2023 absorption at 200,000 square feet.
While overall leasing activity was down compared to the previous three years in the region, demand remained stable, the report noted. Overall rents climbed, although logistics center (warehouse) rents were flat, CBRE reported.
The Philadelphia metro area, including northern Delaware, gained 20.1 million square feet of new Class A space in 2023. Despite cooling demand, the market still absorbed 5.5 million square feet of vacancy during the year, a pace similar to pre-pandemic years.
According to the report, beginning in late 2022, developers reacted to rising vacancy rates by pausing plans in their early stages while moving ahead with fully approved and fully funded projects.
Not long ago, the Philadelphia Metro desperately needed more modern logistics facilities. But for the time being, the existing supply seems sufficient, the report noted. The forecast is for demand to continue at current levels, decreasing inventory, the report stated.
Warehouse-industrial projects are also seeing pushback from communities with the New Castle County Council passing and the County Executive signing an ordinance that does not rule out large industrial-warehouse projects but orders restrictions. The ordinance calls for buffers, landscaping, and other measures that will raise the costs of projects still on the drawing board.
Amazon, a driver of logistics center growth in northern Delaware, ended its expansion and has warehouse space south of New Castle County that has not been used.
Click on the headline for a story from a year ago.