Philadelphia I-81/78 Corridor Industrial Market
In the first quarter, the delivery of industrial space amounted to just under 1.8M square feet, falling below the 8-quarter average by 42.0%. Quarterly absorption has measured -643,296 square feet, and vacancy ended up 50 basis points higher than last quarter. Negative absorption can be credited to large lease expirations such as Henkel Corporation vacating the entire 726,000 square foot Class A warehouse that they previously occupied at 8400 Industrial Boulevard W. Henkel Corporation previously had over 1.5M square feet of industrial space in the Corridor across three properties, including 610,898 square feet at 610 Oak Ridge Road and 193,503 square feet at 125 Jaycee Court. Most likely, they wanted to shrink their footprint in the I-81/78 Corridor, as they have multiple other properties throughout the Northeast. During the fourth quarter of 2024, industrial construction starts totaled 775,755 square feet, the third consecutive quarter that groundbreakings fell below 1.0M square feet. The two buildings that broke ground this quarter include the speculative properties 620 Oak Ridge Road in Hazle Township and 1035 Locust Point Road in Manchester, for 248,000 square feet and 527,755 square feet, respectively. As of the first quarter of 2025, the annual average asking rent decreased by 0.9%. This decline follows the period of historically high rent growth in 2022 and 2023, largely influenced by a reduction in Class B asking rates. While Class A asking rates remained relatively stable quarter-over-quarter, Class B asking rates fell by 2.4%.