Newmark released its third-quarter 2020 industrial market report for Greater Philadelphia and the I-81/78 Corridor. Propelled by strong underlying fundamentals and heightened demand, the markets experienced an acceleration of growth throughout the quarter.
Activity in the I-81/78 Corridor industrial market returned to pre-pandemic levels as a result of ongoing regional economic recovery and resumption of construction projects temporarily delayed by the government mandate in the second quarter. Absorption of industrial space in the Corridor was strong, totaling over 3 million square feet in net new occupancy, and more than 5 million square feet of new industrial product delivered to the market, nearly quadrupling second-quarter volumes. Ecommerce and logistics firms represented the bulk of quarterly leasing activity: Amazon transacted two new leases, including the largest lease of the third quarter, at the 1.0-million-square-foot Valley View Trade Center in Northeastern Pennsylvania. Other notable new leases included FedEx signing for the 800,000-square-foot warehouse at 951 Centerville Road and Allen Distribution backfilling 540,000 square feet at the former True Value space at 7058 Snowdrift Road. Heightened market activity is likely to continue through the end of the year and into 2021. Newmark Senior Managing Director Tim Brogan noted, “The Corridor industrial market is booming amid the pandemic. Investors and developers are scouting the market for opportunity, and tenant requirements in the market measure upwards of 10 million square feet.”
Greater Philadelphia’s tri-state market accumulated 2.7 million square feet of positive net absorption during the third quarter, driven primarily by large occupancies in newly-delivered or renovated space. With vacancy decreasing, average asking rates modestly increasing, and a robust development pipeline in place, market fundamentals are undoubtably healthy. The New Castle County, Delaware market realized the largest new occupancy of the quarter when DART Container occupied its newly constructed, 1.0-million-foot warehouse facility on Schoolhouse Road. The Southern New Jersey and Southeastern Pennsylvania markets also experienced large move-ins, including multiple occupancies by Amazon. So far in 2020, Amazon alone has leased six facilities across the three Greater Philadelphia markets, totaling 5.4 million square feet, including a 3.8-million-square-foot, state-of-the-art multi-story facility under construction in Delaware, and multiple recently-delivered speculative warehouses in urban and suburban Philadelphia counties. While Amazon’s impact on the industrial market has been dramatic, other industrial-occupying sectors such as cold storage, logistics, manufacturing and life sciences have also played key roles in driving both absorption and new development. According to Newmark Associate Ryan Guittare, “Developers are likely to respond to the proven need for new supply by moving forward with additional speculative projects in the quarters to come.”
Both the I-81/78 Corridor and Greater Philadelphia industrial markets have the benefit of improving economic conditions and the demonstrated capacity to withstand headwinds caused by the pandemic, especially in comparison with other commercial real estate sectors, and the overall outlook for both regional markets remains positive looking forward into 2021.
About Newmark Group, Inc. (NASDAQ: NMRK)
Newmark Group, Inc. is a world leader in commercial real estate services, with a comprehensive suite of investor/owner and occupier services and products. Our integrated platform seamlessly powers every phase of owning or occupying a property. Our services are tailored to every type of client, from owners to occupiers, investors to founders, growing startups to leading companies. Harnessing the power of data, technology and industry expertise, Newmark brings ingenuity to every exchange, and imagination to every space. Together with London-based partner Knight Frank and independently owned offices, our 18,800 professionals operate from approximately 500 offices around the world, delivering a global perspective and a nimble approach. In 2019, Newmark Group, Inc. generated revenues in excess of $2.2 billion. To learn more, visit nmrk.com or follow @newmark.
