Industrial space vacancy falls to historic low in the region  

In the greater Philadelphia region, including central Pennsylvania and the Lehigh Valley, the vacancy rate for industrial space fell to a historic low of 1.96% in the first quarter of 2022. 

That’s from a recent report published by Lee & Associates of Eastern Pennsylvania, for a broad area that covers the Philadelphia metro submarket and six other submarkets spreading from Pennsylvania to New Jersey, Delaware and Maryland. 

Driving the record low in vacancy was a surge in first-quarter leasing activity that produced 10.7 million-plus square feet of net absorption. That was more than twice the level recorded in the fourth quarter of 2021 and basically offset the 9.2 million square feet of industrial space delivered to the region in the first three months of 2022. 

In central Pennsylvania, net absorption was 4.5 million square feet, resulting in a Q1 vacancy rate of 2.1%. That submarket encompasses Dauphin, Lebanon, Cumberland, Franklin, Lancaster, York, Perry and Adams counties. 

The report noted that 10.7 million square feet of industrial space is under construction in central Pennsylvania. A major project is the 1.8 million-plus square foot Walmart fulfillment center in Shippensburg. 

In the Lehigh Valley submarket, which covers Berks, Lehigh and Northampton counties, 3.1 million square feet of net absorption was generated, leading to a 1.47% vacancy rate. 

A “significant driver” of that was completion of the 1.1 million-square-foot building for Mars Petcare in Bethel, Lee & Associates said. 

Currently, 8.8 million square feet of industrial space is under construction in the Lehigh Valley. 

Overall, more than 46 million square feet is being built throughout Philadelphia and the surrounding submarkets. 

“The greater Philadelphia region remains the beneficiary of a dense regional population approaching 6 million people and a strategic Northeast location that provides access to approximately 35% of the United States’ population within a one-day truck drive,” Lee Fittipaldi, principal of Lee & Associates, said in a release. 

“The construction and leasing of industrial and warehouse product both nationally and locally reflect the dramatic rise of e-commerce spending, including next-day and same-day delivery, along with strong growth of the manufacturing sector.” 

End-users are also attracted to the availability of high-quality, trained labor in the region, he added.