14C — January 31 - February 13, 2020 — 2020 Forecast — M id A tlantic Real Estate Journal
www.marej.com
2020 F orecast
Newmark Knight Frank Industrial market fundamentals are strong going into 2020
l e a s e d i t s fourth-quar- ter 2019 in- dustrial mar- ket reports for Greater P h i l a d e l - phia and the I-81/78 Cor- ridor. Both W
the single largest quarterly total in this economic cycle. In the Greater Philadelphia industrial market, 5.6 million s/f of new industrial product delivered, the largest quar- terly addition to the inventory in the 21st century to date. In the I-81/78 Corridor in- dustrial market, the fourth quarter of 2019 had numer- ous large occupancies of re- cently-delivered speculative and build-to-suit warehouses, including DHL’s arrival at the 1.0 million s/f warehouse located at 84 Zions View Dr. Thismarked the region’smost
significant fourth-quarter oc- cupancy. The heightened activity brought the market’s vacancy rate below the 8.0% mark attained in the third quarter, to close the year at 7.8%. Development levels in the I-81/78 Corridor remained elevated at 17.0 million s/f, divided relatively equally among the region’s three sub- markets, Northeastern Penn- sylvania, Central Pennsylva- nia, and the Lehigh Valley, which all posted construction levels above 5.0 million s/f. Yet, for the first time in over
In Greater Philadelphia’s industrial market, a signifi- cant amount of new supply deliveries in the fourth quar- ter boosted annual inventory additions to nearly 10 million s/f, the majority of which was constructed speculatively. At year-end, 55% of the space delivered across the tri-state Greater Philadelphia market in 2019 was available for lease. Speaking about the new supply landscape, NKF man- aging director Justin Bell said, “Many local occupiers are not equipped to move into modern high-bay space. Developers are building these properties largely with na- tional-scale, credit tenants in mind, and these are the types of tenants most likely to lease the new supply.” In the fourth quarter, mul- tiple leases were signed at newly-delivered or under- construction properties, and still more were in advanced negotiations with tenants, so occupancy rates for new construction will increase in 2020. Demand for new space is strongest in Southern New Jersey, where all buildings constructed in the first three quarters of the year have been fully leased. The Greater Philadelphia market accumulated 575,000 s/f in quarterly absorption, with each submarket – South- eastern Pennsylvania, South- ern New Jersey, and Dela- ware – positively contributing to the total. The market’s largest fourth-quarter oc- cupancy was Kellogg’s move into the 905,520 s/f build-to- suit in Lancaster County. In the Delaware submar- ket, the fourth-quarter in- dustrial vacancy rate of 2.5% kept market activity very modest with little room for movement. Yet, two new projects announced in the second half of 2019 made a significant splash: Dart Container chose Delaware as the location for a new million s/f facility, which will break ground in early 2020, and a major ecommerce provider is reportedly in advanced nego- tiations for a planned multi- story warehouse. This latter project will join the ranks of only a handful of other such modern multi-story ware- houses in the country, putting the Delaware market on the map.
a decade, the Northeastern Pennsylvania submarket led in total development under- way, with 6.1 million s/f in the pipeline, half of which is preleased. According to NKF execu- tive managing director Jim Belcher , “Construction ac- tivity is pushing northward because there are few prime developable sites left in the Lehigh Valley. You can’t make new dirt in the Val- ley, but there’s still plenty of available land with excellent regional access in the North- east.”
AYNE , PA — NewmarkKnight Frank (NKF) re-
Justin Bell
markets hit notable mile- stones in the final quarter of the decade. The I-81/78 Corridor realized 6.2 million s/f of positive net absorption,
Multi-Family. Mixed-Use. Development.
BOR Jeffrey Goldstein NJ #9110168
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