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cushmanwakefield.com
PhiladelphiaIndustrial Q4 2016
MARKETBEAT
Economic Indicators
Market Indicators (Overall, All Property Types)
Overall Net Absorption/Overall Asking Rent
4-QTR TRAILING AVERAGE
Overall Vacancy
Q4 15 Q4 1612-Month
Forecast
Philadelphia Employment 2,845M 2,888M
Philadelphia Unemployment 4.8% 5.4%
U.S. Unemployment 5.0% 4.8%
Q4 15 Q4 1612-Month
Forecast
Vacancy 5.6% 4.2%
Net Absorption (sf) 5.5M 8.5M
Under Construction (sf) 4.7M 3.5M
Average Asking Rent* $4.70 $4.63
*Rental rates reflect net asking $psf/year
EconomyThe Philadelphia Metropolitan Area’s (MSA) unemployment rate
increased to 5.4% in the fourth quarter of 2016, an increase by 60
basis points (BPS) year-over-year. Despite the increase, total
nonfarm employment increased by 1.5% over the past year.
Philadelphia’s manufacturing index also reached its highest point
of 2016 in December, with a reading of 19.7, the highest reading
since December of 2014.
Market OverviewThe Philadelphia industrial market’s overall vacancy rate declined
to 4.2% in the fourth quarter of 2016, down 140 BPS from the
fourth quarter of 2015. Overall absorption increased to 8.5 million
square feet (MSF), the highest annual total since 2005. The
reason for the increase in positive absorption was the 4.1 MSF of
new construction that delivered in 2016, in which 99.7% of that
inventory is currently occupied. Leasing activity was also robust
with 12.5 MSF of new activity, the highest since 2005. Overall
asking rental rates for warehouse and distribution space declined
by 0.2% over the past 12 months to $4.21 per square foot (PSF).
Investment sales activity was strong in 2016 with 75 buildings that
were sold totaling 7.3 MSF transacted. Combined with 2015
numbers, 172 buildings were sold over the past two years totaling
18.8 MSF, 42.2% more than the market’s activity from 2010-2014.
Nine of the 10 largest leases signed in 2016 were in either
Burlington or Gloucester counties in Southern New Jersey. In
Burlington County, Seldat Distribution subleased 1.0 MSF at 1900
River Road in Burlington, the Camuto Group took 682,708 square
feet (SF) at 32 Springside Road in Westhampton, and a
confidential tenant leased the 613,920-SF spec building that
delivered in 2016 at 309 Cedar Lane in Florence. In Gloucester
County, notable leases included, a confidential tenant preleasing
the 1.0-MSF proposed building at 2651 Oldsman Creek Road in
Logan Township, XPO Logistics leasing 393,120 SF at 2810
Oldmans Creek Road also in Logan Township, and CSI taking
180,000 SF at 100 Friars Lane in Thorofare. In the Philadelphia
suburbs, the largest lease signed this year was Continental Tire
leasing 740,880 SF at 3000 AM Drive in Quakertown.
OutlookExpect new construction activity to increase in 2017, supported by
the market’s decline in vacancy and the demand for new product
as new buildings constructed in 2016 delivered to the market were
nearly 100% occupied. The bulk of the market’s new construction
activity will continue to occur in Southern New Jersey, with
multiple projects expected to break ground in early 2017.
PHILADELPHIA INDUSTRIAL
$4.30
$4.40
$4.50
$4.60
$4.70
$4.80
$4.90
$5.00
$5.10
$5.20
0
1,000
2,000
3,000
4,000
5,000
6,000
2011 2012 2013 2014 2015 2016
Net Absorption, (thousands) Asking Rent, $ PSF
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2011 2012 2013 2014 2015 2016
Historical Average = 5.9%
MARKETBEAT
About Cushman & WakefieldCushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live.
Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining
our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is
among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset
services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ
Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit
www.cushmanwakefield.com or follow @CushWake on Twitter.
Copyright © 2017 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple
sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or
representations as to its accuracy.
PhiladelphiaIndustrial Q4 2016
SUBMARKETTOTAL
BLDGS
INVENTORY
(SF)
YTD
LEASING
ACTIVITY
(SF)
YTD USER
SALES
ACTIVITY
(SF)
OVERALL
VACANCY
RATE
YTD
OVERALL NET
ABSORPTION
(SF)
UNDER
CNSTR
(SF)
YTD
CONSTR
COMPLETIONS
(SF)
OVERALL
WEIGHTED
AVG.
NET RENT(MF)
OVERALL
WEIGHTED
AVG.
NET RENT(OS)
OVERALL
WEIGHTED
AVG.
NET RENT(W/D)
Philadelphia County** 714 58,037,085 777,973 206,000 7.3% 476,579 0 145,000 $2.85 $8.01 $3.52
Lower Bucks County 588 38,415,272 1,198,965 325,907 4.6% 294,598 0 0 $4.60 $9.70 $4.08
Upper Bucks County 393 19,642,240 996,198 306,755 2.0% 773,735 0 43,000 N/A $8.80 $5.23
Montgomery County 756 46,462,047 1,644,036 143,889 3.2% 788,399 0 531,333 $5.86 $10.42 $6.41
Chester County 479 26,659,464 429,912 411,535 1.9% 97,129 53,040 0 $5.50 $8.92 $6.83
Delaware County 258 15,266,812 280,319 53,100 4.7% 253,485 0 247,452 $4.50 $6.17 $4.95
SUBURBAN PHILADELPHIA 2,474 146,445,835 4,549,430 1,241,186 3.4% 2,207,346 53,040 821,785 $5.54 $8.80 $4.70
Burlington County 393 36,084,769 4,329,174 136,333 5.5% 4,662,516 1,850,348 3,131,917 N/A $7.25 $4.29
Camden County 456 27,106,816 345,381 366,265 2.3% 151,473 600,000 0 $4.07 $9.46 $4.83
Gloucester County 224 22,175,807 2,492,949 145,275 2.1% 959,857 963,050 0 N/A $5.97 $3.87
SOUTHERN NEW JERSEY 1,073 85,367,392 7,167,504 647,873 3.6% 5,773,846 3,413,398 3,131,917 $4.07 $7.04 $4.27
Northern Delaware*** 355 26,067,916 961,211 232,000 8.2% 339,723 0 26,600 $6.01 $6.39 $5.00
PHILADELPHIA MSA TOTALS 4,261 289,850,312 12,494,907 2,095,059 4.2% 8,457,771 3,466,438 4,098,702 $3.64 $8.04 $4.22
*Rental rates reflect asking $psf/year **Philadelphia County not included in Suburban Philadelphia Totals MF = Manufacturing OS = Office Service/Flex W/D = Warehouse/Distribution
*** Northern Delaware market not included in Philadelphia MSA Totals
Key Lease Transactions 2016
PROPERTY SF TENANT PROPERTY TYPE SUBMARKET
1900 River Road 1,048,631 Seldat Distribution, Inc. Warehouse/Distribution Burlington County
2651 Oldmans Creek Road 1,016,116 Confidential Warehouse/Distribution Gloucester County
3000 AM Drive 740,880 Continental Tire Warehouse/Distribution Upper Bucks County
Key Sales Transactions 2016
PROPERTY SF SELLER/BUYER PROPERTY TYPE PRICE / $PSF SUBMARKET
400 Lukens Drive 485,987Zenith Home Corp. / STAG
Industrial, Inc.Warehouse/Distribution $27,500,000 / $57 New Castle County
Keystone Industrial Portfolio Sale 475,910 GLP / Carson Companies Warehouse/Distribution $26,085,000 / $55 Lower Bucks County
Key Construction Completions 2016
PROPERTY SF SUBMARKET MAJOR TENANT PROPERTY TYPE COMPLETION DATE
400 Bordentown Hedding Road 1,300,000 Burlington County W.W. Grainger Warehouse/Distribution Q3 2016
1600 River Road 740,537 Burlington County H&M Warehouse/Distribution Q2 2016
Key Projects Under Construction
PROPERTY SF SUBMARKET MAJOR TENANT PROPERTY TYPE COMPLETION DATE
32 Springside Road 682,708 Burlington County Camuto Group Warehouse/Distribution Q1 2017
Holtec Technology Campus 600,000 Camden County Holtec International Manufacturing Q4 2017
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Philadelphia, PA 19103
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