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Industrial Vacancy Edges Up; Sublease Space and Construction Slow

PHILADELPHIA-Although the vacancy rate for the metro-area industrial market inched up to 10.4% in third-quarter, CBRE analysts see mild, steady growth as large blocks of sublease space become scarce and construction halts.

By Marita Thomas | Updated on December 01, 2003

PHILADELPHIA-The third quarter industrial vacancy rate edged up just 0.6% in third quarter, compared with the quarter before, resting at 10.4%, according to research from the local office of CB Richard Ellis. Despite the slight rise, however, the CBRE report notes that industrial vacancies remain low in comparison with 2002.

Furthermore, the outlook is brightening because large blocks of contiguous industrial sublet space are scarce throughout the region. “There is virtually no sublet space on the market in Philadelphia County, for example,” CBRE reports. In addition, new construction is under way only in Bucks County among all 10 of the counties CBRE studies. Of the 10, five surround Philadelphia, another is the Lehigh Valley, PA market, and the remaining four are in Delaware and Southern New Jersey.

Of the Pennsylvania counties, at 17.4%, the Lehigh Valley market has the highest vacancy rate. At 4%, Chester County has the lowest and, not incidentally, among the highest average asking rental rates–$5.59 per sf. The average asking rental rate in Montgomery County is $7.06 per sf, the highest of all in the area, and the vacancy rate there is 10.2%.

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