Greater Philadelphia Industrial
CBRE
Greater Philadelphia Industrial www.cbre.com/research
First Quarter 2012
Total Vacancy Rates
11.1%
Direct Lease Rates
$3.89 NNN
Total Net Absorption*
0.16M SF
Construction
4.75M SF
Yr.
Qtr.
* The arrows are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period.)
Hot Topics • Carpenter Technology Corp. entered into agreement to buy 50 acres of land and four buildings in Reading, PA for $6 million to expand its manufacturing facilities. • DCI Products purchased a 50K SF industrial site at 415 S. Penn Street in Clifton Heights, PA for $875,000. • Henry Schein, a worldwide distributor of medical, dental & veterinary supplies, renewed for 623K SF at 41 Weaver Road in Denver, PA.
Activity in the Lehigh Valley, PA submarket is mirroring that in Central PA. Deal velocity remains steady, but tenants are finding that limited product is restricting possibilities; this is influencing some tenants to examine buildto-suit options. Additionally, the trend has sparked developers to aggressively pursue land sites to try and meet demand with new supply. Liberty Property Trust, Griffin Land, and Exeter Property Group are all on schedule to deliver new speculative space.
Recovery from the auto factory closings in New Castle County, DE continued in the first quarter of 2012. The submarket experienced over 90K SF of positive total net absorption as activity increased. Burris Logistics and Canusa Hershman Recycling Company both signed deals in the 100K SF range. While deal size generally stays in the 20K-40K SF size, these larger deals are affecting the already constrained market of large contiguous blocks in the region.
Philadelphia and the surrounding suburban counties that have been hit particularly hard by the recent recession are showing signs of improvement. Unlike other markets in the Greater Philadelphia region, developers will remain on the sidelines until they see an increase in asking rates. Southern Wine & Spirits and Johnson Matthey both signed large deals during the first quarter. Additionally, there was a noticeable increase in demand for lab space. Charles River
The Northeast PA submarket saw the healthiest level of absorption during the first quarter with over 522K SF of positive total net absorption. R.C. Moore, Inc. expanded and relocated during the quarter, taking 289K SF at the Pittston Distribution Center in Pittston, PA. With such limited supply in the Lehigh Valley, PA and Central PA markets, some tenants are looking to Northeast PA as a relocation option. While there is currently no active construction and institutional demand is low, look for this to change as this market picks up velocity.
The lack of large available blocks is also plaguing Southern New Jersey. Despite limited inventories of large blocks, activity is still strong. Southern New Jersey experienced nearly 350K SF of positive total net absorption during the first quarter. Developers are beginning to discuss speculative construction that could begin before the end of the year to supply the market with much needed large, quality blocks of space. Total Vacancy Rate Rate (%)11.1% Total Vacancy Direct Lease $3.89 NNN LeaseRate Rate
Total Vacancy vs. Average Direct Total Asking Lease Rate Direct Asking Lease Rate Vacancy vs. Average 16.0%
$3.95
14.0%
$3.90
12.0%
$3.85
10.0%
$3.80
8.0%
$3.75
6.0%
$3.70
4.0%
$3.65
2.0%
$3.60
Per Square Foot Per Year (NNN)
Change from last
Current
Laboratories signed for 29K SF in King of Prussia, PA and there are a number of other tenants circulating the market for lab space.
Total Vacancy Rate (%)
Quick Stats
Tenant activity in the Central PA submarket continued to be strong through the beginning of 2012. There were a number of large leases signed during the quarter including M&M Logistics, Inc., Henry Schein, and L’Oreal. Limited inventories of contiguous blocks 100K SF and greater are, and will continue to be, the big story in the industrial markets. During the quarter, the Trammell Crow Company began speculative construction on a new 700K SF distribution facility located at exit 44 off Interstate 81, which is scheduled to be completed this summer. Until developers can match demand with new blocks of large, quality space, Central PA submarket will continue to tighten.
$3.55
0.0% 1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012 © 2012 CBRE, Inc.
MARKET STATISTICS - 100,000 SF AND LARGER AVG. Minimum ASKING LEASE RATE ($NNN/PSF/YR)
0
0
(509,986)
$4.17
14.9%
0
0
213,209
$4.07
17.8%
18.6%
0
0
428,078
$3.07
148,681,066
11.5%
12.6%
0
3,042,000
(260,168)
$3.76
Chester County, PA
12,375,101
4.4%
6.5%
0
0
153,296
$3.96
Delaware County, PA
10,762,762
9.1%
9.1%
0
0
(141,059)
$4.54
Gloucester County, NJ
15,556,126
14.5%
18.5%
0
0
(291,333)
$3.85
Lehigh Valley, PA*
38,301,492
5.7%
11.3%
0
1,709,473
507,293
$4.37
Montgomery County, PA
32,644,365
7.9%
8.2%
0
0
50,474
$4.88
New Castle County, DE
12,661,494
14.0%
14.0%
0
0
90,799
$4.21
Northeast PA***
36,136,336
18.2%
18.6%
108,800
0
522,434
$3.70
Philadelphia County, PA
30,066,630
9.4%
10.5%
0
0
(600,516)
$4.02
401,326,709
11.1%
12.7%
108,800
4,751,473
162,521
$3.89
AVG. Minimum ASKING LEASE RATE ($NNN/PSF/YR)
Inventory
Total Availability Rate
Completions
Bucks County, PA
27,260,087
8.5%
10.0%
Burlington County, NJ
21,422,027
12.3%
Camden, County, NJ
15,459,223
Central PA**
Submarket
Total
Greater Philadelphia Industrial
Under Construction
2011 YTD TOTAL NET ABSORPTION (SF)
Total Vacancy Rate
MARKET STATISTICS - 10,000 TO 100,000 SF Total Availability Rate
Completions
Under Construction
2011 YTD TOTAL NET ABSORPTION (SF)
Bucks County, PA
24,079,595
10.5%
10.8%
0
13,778
(11,417)
$6.04
Burlington County, NJ
15,500,416
17.0%
18.1%
0
0
10,790
$5.50
Camden, County, NJ
17,044,656
15.1%
15.3%
0
0
(41,932)
$5.90
Central PA**
39,244,668
10.7%
11.1%
0
0
(111,609)
$4.41
Chester County, PA
13,488,455
12.8%
13.3%
0
24,858
22,141
$8.01
Delaware County, PA
10,461,045
12.3%
12.6%
0
0
(151,737)
$8.05
Gloucester County, NJ
10,005,173
12.6%
13.2%
0
0
4,465
$5.22
Lehigh Valley, PA*
19,966,435
10.7%
11.5%
0
0
(25,588)
$5.61
Montgomery County, PA
24,028,403
14.0%
14.2%
0
0
(15,170)
$6.71
New Castle County, DE
16,280,200
12.9%
13.7%
0
31,200
(54)
$5.03
Northeast PA***
8,887,503
9.4%
9.4%
0
0
(8,933)
$3.61
Philadelphia County, PA
21,402,690
9.0%
9.7%
0
0
(15,444)
$5.09
220,389,239
12.1%
12.6%
0
69,836
(344,488)
$5.70
Submarket
Total
* Lehigh and Northampton Counties ** Cumberland, Dauphin, Franklin, Lancaster, Lebanon and York Counties *** Carbon, Lackawanna, Luzerne, Monroe and Schuylkill Counties
Page 2 © 2012 CBRE Inc.
First Quarter 2012
Inventory
Total Vacancy Rate
Economic Conditions Unemployment Rate - Seasonally Adjusted
Total Vacancy & Net Absorption Total Vacancy vs. Net Absorption
NJ DE
12.0%
Square Feet (000's)
Unemployment Rate (%)
16.0%
3,500
14.0% 12.0%
2,500
6.0% 4.0%
2,000
10.0%
1,500
8.0%
1,000
6.0%
500
4.0%
0
2.0%
2.0%
-500
0.0%
-1,000
0.0% 2006
2007
2008
2009
2010
2011
1Q2010
YTD 2012
The national unemployment rate held steady at 8.3%, the lowest point in three years. After a positive start to 2012, many are projecting the economy to grow around 2.0%-2.3% - an increase from the annualized 1.7% growth of 2011. The U.S. Labor Department reported that there were over three million green jobs nationwide in 2010, or 2.4% of total employment. Of those jobs, 182K were in Pennsylvania, making it one of the five highest states in the country in generating green employment. The steady growth in the automotive industry has manifested itself in both increased manufacturing activity, and steady U.S. exports. Consumer confidence continues to slowly rise, as households are becoming more willing to dip into previously lockeddown savings to purchase “big ticket” items, such as new cars. However, consumer spending should be kept in check as a result of the effect of geopolitical tensions. After surging late in 2011, orders of durable goods – a key indicator of business investment – fell in 1Q12. However, the U.S. Congress’ extension of the payroll tax cut should encourage steady growth to begin again.
Rental Rates
Direct Asking Lease Rate AverageAverage Direct Asking Lease Rate
$3.89 NNN
8,000
$3.90
7,000
$3.85
6,000
$3.80
5,000
$3.70
3Q2010
4Q2010
New Construction
$3.95
$3.75
2Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
The overall vacancy rate remained flat this quarter at 11.1% as demand for industrial space was modest. Vacancy should gradually decline as user demand improves at a quicker rate from a recovering local economy. Tenants will continue to benefit from renewal packages, including free rent in order to reduce their overall occupancy costs, but will start to lose some of their leasing negotiation leverage as landlords begin to feel more comfortable making long-term decisions. The market posted positive total net absorption for the eighth straight quarter with 162K SF. The submarkets experiencing the greatest positive demand during the first quarter of 2012 are the Northeast PA at 522K SF, the Lehigh Valley, PA at 507K SF and Southern New Jersey at 350K SF. Continued strengthening in all sectors of the Greater Philadelphia industrial market is anticipated for 2012.
Square Feet (000's)
Per Square Foot Per Year (NNN)
Total Vacancy Rate (%)
4,000 3,000
8.0%
Net Absorption ('000's)
Construction Activity Construction ('000's)
Greater Philadelphia Industrial
10.0%
Vacancy 11.1% Absorption 0.16M SF
Total Vacancy Rate (%)
PA 7.6% NJ 9.0% DE 7.0% PA
4.75M SF
4,000 3,000
$3.65
2,000
$3.60
1,000 0
$3.55 1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
2007
2008
2009
2010
2011
YTD 2012
The discipline that developers demonstrated over the last three years benefited overall fundamentals as the relatively low amount of new industrial inventory added to the market helped the Greater Philadelphia industrial market to recover more rapidly than other markets. As the economy continues to grow, total vacancy rates should fall allowing developers to leverage the stronger market and restart the construction pipeline. Construction activity continues to increase, with the construction starts totaling 2.07M SF during the first quarter. Projects under construction currently total nearly 4.75M SF, which reflects a 1200% increase from one year ago. While encouraging, the number is still down nearly 50% from first quarter 2008. These improved conditions will allow developers to consider banking new land purchases for build-to-suit tenants and future speculative projects. Page 3 © 2012 CBRE Inc.
First Quarter 2012
The overall average industrial asking rental rate increased from $3.76 NNN during the fourth quarter of 2011 to $3.89 NNN in the first of quarter 2012. While landlords still remain aggressive with price in pursuing new tenants and preserving occupancy levels in their assets, they are also becoming less eager to offer deeper rental concession packages and rent abatement based on improving market forecasts. Because leasing activity has favored Class A space, Class B and C property owners have had to lower asking rates in order to spark the interest of potential tenants. The “blend and extend” attitude of property owners has significantly faded as landlords are seeing market rental rates continuing to rebound. The Montgomery County, PA submarket currently has the highest average asking rental rate at $4.88 NNN, while the Camden County, NJ submarket has the lowest average asking rental rate at $3.07 NNN.
2006
Greater Philadelphia Industrial
Top Lease Transactions Size (SF)
Tenant
Address, City, State
623,711
Henry Schein
41 Weaver Road, Denver, PA
387,500
Ceva Logistics US, Inc.
600 Industrial Drive, York, PA
363,000
Uline, Inc.
400 Boulder Drive, Allentown, PA
324,132
Crossroads Beverage Group, LLC
1055 Crossroads Boulevard, Reading, PA
212,428
Amcor Rigid Plastics USA, Inc.
7553 Morris Court, Allentown, PA
Availability Rate Available space as a percentage of the Base Inventory or Building Sq. Ft
Top Sale Transactions
Average Asking Lease Rate Average of Asking Lease Rates for each property weighted by the associated Available Space.
Size (SF)
Buyer
Address, City, State
390,000
First Industrial Realty Trust, Inc.
105 Steamboat Boulevard, Manchester, PA
314,521
AREA Property Partners
200 W Stewart Huston Drive, Sadsbury, PA
Available Area (Square Feet) Area which is either physically vacant or occupied that is being actively marketed and is available for tenant build-out, including sublease space.
289,242
Endurance Real Estate Group, LLC
301-305 Oak Street, Pittston, PA
Completions Rentable Building Area completed during the period.
132,233
Do Little Corporation
1665 John Tipton Boulevard, Pennsauken, NJ
128,000
Action Manufacturing
190 Rittenhouse Circle, Bristol, PA
Base Inventory, Base or Building Square Feet The sum of the Rentable Building Area for all competitive properties. Market Coverage Includes all competitive industrial and flex buildings 10,000 SF and greater in size.
Submarket Map
Net Absorption The change in occupied square feet from one period to the next, including both direct and sublease space. Occupied Square Feet Rentable Building Area less Vacant Space. Under Construction Buildings that have begun construction as evidenced by site excavation or foundation work, and is on-going. Vacancy Rate Vacant space as a percentage of the Base Inventory or Building Sq. Ft. Vacant Area (Square Feet) Existing Building Area which is physically vacant or immediately available, including sublease space.
© Copyright 2012 CBRE Statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CBRE Corporate Communications or CBRE’s research and econometric forecasting unit, CBRE Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.
For more information regarding the MarketView, please contact: Michael L. Compton, Research Manager CBRE, Inc. Two Liberty Place, 50 S. 16th Street, Suite 3000 T. 215.561.8900 F. 215.557.6719 [email protected]
Greater Philadelphia Industrial www.cbre.com/research
First Quarter 2012
Total Vacancy Rates
11.1%
Direct Lease Rates
$3.89 NNN
Total Net Absorption*
0.16M SF
Construction
4.75M SF
Yr.
Qtr.
* The arrows are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period.)
Hot Topics • Carpenter Technology Corp. entered into agreement to buy 50 acres of land and four buildings in Reading, PA for $6 million to expand its manufacturing facilities. • DCI Products purchased a 50K SF industrial site at 415 S. Penn Street in Clifton Heights, PA for $875,000. • Henry Schein, a worldwide distributor of medical, dental & veterinary supplies, renewed for 623K SF at 41 Weaver Road in Denver, PA.
Activity in the Lehigh Valley, PA submarket is mirroring that in Central PA. Deal velocity remains steady, but tenants are finding that limited product is restricting possibilities; this is influencing some tenants to examine buildto-suit options. Additionally, the trend has sparked developers to aggressively pursue land sites to try and meet demand with new supply. Liberty Property Trust, Griffin Land, and Exeter Property Group are all on schedule to deliver new speculative space.
Recovery from the auto factory closings in New Castle County, DE continued in the first quarter of 2012. The submarket experienced over 90K SF of positive total net absorption as activity increased. Burris Logistics and Canusa Hershman Recycling Company both signed deals in the 100K SF range. While deal size generally stays in the 20K-40K SF size, these larger deals are affecting the already constrained market of large contiguous blocks in the region.
Philadelphia and the surrounding suburban counties that have been hit particularly hard by the recent recession are showing signs of improvement. Unlike other markets in the Greater Philadelphia region, developers will remain on the sidelines until they see an increase in asking rates. Southern Wine & Spirits and Johnson Matthey both signed large deals during the first quarter. Additionally, there was a noticeable increase in demand for lab space. Charles River
The Northeast PA submarket saw the healthiest level of absorption during the first quarter with over 522K SF of positive total net absorption. R.C. Moore, Inc. expanded and relocated during the quarter, taking 289K SF at the Pittston Distribution Center in Pittston, PA. With such limited supply in the Lehigh Valley, PA and Central PA markets, some tenants are looking to Northeast PA as a relocation option. While there is currently no active construction and institutional demand is low, look for this to change as this market picks up velocity.
The lack of large available blocks is also plaguing Southern New Jersey. Despite limited inventories of large blocks, activity is still strong. Southern New Jersey experienced nearly 350K SF of positive total net absorption during the first quarter. Developers are beginning to discuss speculative construction that could begin before the end of the year to supply the market with much needed large, quality blocks of space. Total Vacancy Rate Rate (%)11.1% Total Vacancy Direct Lease $3.89 NNN LeaseRate Rate
Total Vacancy vs. Average Direct Total Asking Lease Rate Direct Asking Lease Rate Vacancy vs. Average 16.0%
$3.95
14.0%
$3.90
12.0%
$3.85
10.0%
$3.80
8.0%
$3.75
6.0%
$3.70
4.0%
$3.65
2.0%
$3.60
Per Square Foot Per Year (NNN)
Change from last
Current
Laboratories signed for 29K SF in King of Prussia, PA and there are a number of other tenants circulating the market for lab space.
Total Vacancy Rate (%)
Quick Stats
Tenant activity in the Central PA submarket continued to be strong through the beginning of 2012. There were a number of large leases signed during the quarter including M&M Logistics, Inc., Henry Schein, and L’Oreal. Limited inventories of contiguous blocks 100K SF and greater are, and will continue to be, the big story in the industrial markets. During the quarter, the Trammell Crow Company began speculative construction on a new 700K SF distribution facility located at exit 44 off Interstate 81, which is scheduled to be completed this summer. Until developers can match demand with new blocks of large, quality space, Central PA submarket will continue to tighten.
$3.55
0.0% 1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012 © 2012 CBRE, Inc.
MARKET STATISTICS - 100,000 SF AND LARGER AVG. Minimum ASKING LEASE RATE ($NNN/PSF/YR)
0
0
(509,986)
$4.17
14.9%
0
0
213,209
$4.07
17.8%
18.6%
0
0
428,078
$3.07
148,681,066
11.5%
12.6%
0
3,042,000
(260,168)
$3.76
Chester County, PA
12,375,101
4.4%
6.5%
0
0
153,296
$3.96
Delaware County, PA
10,762,762
9.1%
9.1%
0
0
(141,059)
$4.54
Gloucester County, NJ
15,556,126
14.5%
18.5%
0
0
(291,333)
$3.85
Lehigh Valley, PA*
38,301,492
5.7%
11.3%
0
1,709,473
507,293
$4.37
Montgomery County, PA
32,644,365
7.9%
8.2%
0
0
50,474
$4.88
New Castle County, DE
12,661,494
14.0%
14.0%
0
0
90,799
$4.21
Northeast PA***
36,136,336
18.2%
18.6%
108,800
0
522,434
$3.70
Philadelphia County, PA
30,066,630
9.4%
10.5%
0
0
(600,516)
$4.02
401,326,709
11.1%
12.7%
108,800
4,751,473
162,521
$3.89
AVG. Minimum ASKING LEASE RATE ($NNN/PSF/YR)
Inventory
Total Availability Rate
Completions
Bucks County, PA
27,260,087
8.5%
10.0%
Burlington County, NJ
21,422,027
12.3%
Camden, County, NJ
15,459,223
Central PA**
Submarket
Total
Greater Philadelphia Industrial
Under Construction
2011 YTD TOTAL NET ABSORPTION (SF)
Total Vacancy Rate
MARKET STATISTICS - 10,000 TO 100,000 SF Total Availability Rate
Completions
Under Construction
2011 YTD TOTAL NET ABSORPTION (SF)
Bucks County, PA
24,079,595
10.5%
10.8%
0
13,778
(11,417)
$6.04
Burlington County, NJ
15,500,416
17.0%
18.1%
0
0
10,790
$5.50
Camden, County, NJ
17,044,656
15.1%
15.3%
0
0
(41,932)
$5.90
Central PA**
39,244,668
10.7%
11.1%
0
0
(111,609)
$4.41
Chester County, PA
13,488,455
12.8%
13.3%
0
24,858
22,141
$8.01
Delaware County, PA
10,461,045
12.3%
12.6%
0
0
(151,737)
$8.05
Gloucester County, NJ
10,005,173
12.6%
13.2%
0
0
4,465
$5.22
Lehigh Valley, PA*
19,966,435
10.7%
11.5%
0
0
(25,588)
$5.61
Montgomery County, PA
24,028,403
14.0%
14.2%
0
0
(15,170)
$6.71
New Castle County, DE
16,280,200
12.9%
13.7%
0
31,200
(54)
$5.03
Northeast PA***
8,887,503
9.4%
9.4%
0
0
(8,933)
$3.61
Philadelphia County, PA
21,402,690
9.0%
9.7%
0
0
(15,444)
$5.09
220,389,239
12.1%
12.6%
0
69,836
(344,488)
$5.70
Submarket
Total
* Lehigh and Northampton Counties ** Cumberland, Dauphin, Franklin, Lancaster, Lebanon and York Counties *** Carbon, Lackawanna, Luzerne, Monroe and Schuylkill Counties
Page 2 © 2012 CBRE Inc.
First Quarter 2012
Inventory
Total Vacancy Rate
Economic Conditions Unemployment Rate - Seasonally Adjusted
Total Vacancy & Net Absorption Total Vacancy vs. Net Absorption
NJ DE
12.0%
Square Feet (000's)
Unemployment Rate (%)
16.0%
3,500
14.0% 12.0%
2,500
6.0% 4.0%
2,000
10.0%
1,500
8.0%
1,000
6.0%
500
4.0%
0
2.0%
2.0%
-500
0.0%
-1,000
0.0% 2006
2007
2008
2009
2010
2011
1Q2010
YTD 2012
The national unemployment rate held steady at 8.3%, the lowest point in three years. After a positive start to 2012, many are projecting the economy to grow around 2.0%-2.3% - an increase from the annualized 1.7% growth of 2011. The U.S. Labor Department reported that there were over three million green jobs nationwide in 2010, or 2.4% of total employment. Of those jobs, 182K were in Pennsylvania, making it one of the five highest states in the country in generating green employment. The steady growth in the automotive industry has manifested itself in both increased manufacturing activity, and steady U.S. exports. Consumer confidence continues to slowly rise, as households are becoming more willing to dip into previously lockeddown savings to purchase “big ticket” items, such as new cars. However, consumer spending should be kept in check as a result of the effect of geopolitical tensions. After surging late in 2011, orders of durable goods – a key indicator of business investment – fell in 1Q12. However, the U.S. Congress’ extension of the payroll tax cut should encourage steady growth to begin again.
Rental Rates
Direct Asking Lease Rate AverageAverage Direct Asking Lease Rate
$3.89 NNN
8,000
$3.90
7,000
$3.85
6,000
$3.80
5,000
$3.70
3Q2010
4Q2010
New Construction
$3.95
$3.75
2Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
The overall vacancy rate remained flat this quarter at 11.1% as demand for industrial space was modest. Vacancy should gradually decline as user demand improves at a quicker rate from a recovering local economy. Tenants will continue to benefit from renewal packages, including free rent in order to reduce their overall occupancy costs, but will start to lose some of their leasing negotiation leverage as landlords begin to feel more comfortable making long-term decisions. The market posted positive total net absorption for the eighth straight quarter with 162K SF. The submarkets experiencing the greatest positive demand during the first quarter of 2012 are the Northeast PA at 522K SF, the Lehigh Valley, PA at 507K SF and Southern New Jersey at 350K SF. Continued strengthening in all sectors of the Greater Philadelphia industrial market is anticipated for 2012.
Square Feet (000's)
Per Square Foot Per Year (NNN)
Total Vacancy Rate (%)
4,000 3,000
8.0%
Net Absorption ('000's)
Construction Activity Construction ('000's)
Greater Philadelphia Industrial
10.0%
Vacancy 11.1% Absorption 0.16M SF
Total Vacancy Rate (%)
PA 7.6% NJ 9.0% DE 7.0% PA
4.75M SF
4,000 3,000
$3.65
2,000
$3.60
1,000 0
$3.55 1Q2010
2Q2010
3Q2010
4Q2010
1Q2011
2Q2011
3Q2011
4Q2011
1Q2012
2007
2008
2009
2010
2011
YTD 2012
The discipline that developers demonstrated over the last three years benefited overall fundamentals as the relatively low amount of new industrial inventory added to the market helped the Greater Philadelphia industrial market to recover more rapidly than other markets. As the economy continues to grow, total vacancy rates should fall allowing developers to leverage the stronger market and restart the construction pipeline. Construction activity continues to increase, with the construction starts totaling 2.07M SF during the first quarter. Projects under construction currently total nearly 4.75M SF, which reflects a 1200% increase from one year ago. While encouraging, the number is still down nearly 50% from first quarter 2008. These improved conditions will allow developers to consider banking new land purchases for build-to-suit tenants and future speculative projects. Page 3 © 2012 CBRE Inc.
First Quarter 2012
The overall average industrial asking rental rate increased from $3.76 NNN during the fourth quarter of 2011 to $3.89 NNN in the first of quarter 2012. While landlords still remain aggressive with price in pursuing new tenants and preserving occupancy levels in their assets, they are also becoming less eager to offer deeper rental concession packages and rent abatement based on improving market forecasts. Because leasing activity has favored Class A space, Class B and C property owners have had to lower asking rates in order to spark the interest of potential tenants. The “blend and extend” attitude of property owners has significantly faded as landlords are seeing market rental rates continuing to rebound. The Montgomery County, PA submarket currently has the highest average asking rental rate at $4.88 NNN, while the Camden County, NJ submarket has the lowest average asking rental rate at $3.07 NNN.
2006
Greater Philadelphia Industrial
Top Lease Transactions Size (SF)
Tenant
Address, City, State
623,711
Henry Schein
41 Weaver Road, Denver, PA
387,500
Ceva Logistics US, Inc.
600 Industrial Drive, York, PA
363,000
Uline, Inc.
400 Boulder Drive, Allentown, PA
324,132
Crossroads Beverage Group, LLC
1055 Crossroads Boulevard, Reading, PA
212,428
Amcor Rigid Plastics USA, Inc.
7553 Morris Court, Allentown, PA
Availability Rate Available space as a percentage of the Base Inventory or Building Sq. Ft
Top Sale Transactions
Average Asking Lease Rate Average of Asking Lease Rates for each property weighted by the associated Available Space.
Size (SF)
Buyer
Address, City, State
390,000
First Industrial Realty Trust, Inc.
105 Steamboat Boulevard, Manchester, PA
314,521
AREA Property Partners
200 W Stewart Huston Drive, Sadsbury, PA
Available Area (Square Feet) Area which is either physically vacant or occupied that is being actively marketed and is available for tenant build-out, including sublease space.
289,242
Endurance Real Estate Group, LLC
301-305 Oak Street, Pittston, PA
Completions Rentable Building Area completed during the period.
132,233
Do Little Corporation
1665 John Tipton Boulevard, Pennsauken, NJ
128,000
Action Manufacturing
190 Rittenhouse Circle, Bristol, PA
Base Inventory, Base or Building Square Feet The sum of the Rentable Building Area for all competitive properties. Market Coverage Includes all competitive industrial and flex buildings 10,000 SF and greater in size.
Submarket Map
Net Absorption The change in occupied square feet from one period to the next, including both direct and sublease space. Occupied Square Feet Rentable Building Area less Vacant Space. Under Construction Buildings that have begun construction as evidenced by site excavation or foundation work, and is on-going. Vacancy Rate Vacant space as a percentage of the Base Inventory or Building Sq. Ft. Vacant Area (Square Feet) Existing Building Area which is physically vacant or immediately available, including sublease space.
© Copyright 2012 CBRE Statistics contained herein may represent a different data set than that used to generate National Vacancy and Availability Index statistics published by CBRE Corporate Communications or CBRE’s research and econometric forecasting unit, CBRE Econometric Advisors. Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.
For more information regarding the MarketView, please contact: Michael L. Compton, Research Manager CBRE, Inc. Two Liberty Place, 50 S. 16th Street, Suite 3000 T. 215.561.8900 F. 215.557.6719 [email protected]
