Philadelphia Port Market Industrial Real Estate
Q1 2024
The Philadelphia industrial sector at face value has the worst-looking fundamentals out of the 18 markets along the U.S. East Coast’s I-95 corridor.
However, 3 data points bode well for the market despite current elevated vacancy, inventory growth rates and slowed rent growth:
Residential population growth - although Philly’s core - Center City - only grew 4% over the last four years, it has grown 26% since 2011*. Any population growth in the urban center and metro area, especially for a northeast market, is good for the industrial sector. Philly also stands to benefit from continued migration from more expensive metros like NYC as well as other in-state and regional moves into Philly metro.
Metro Area & State GDP - PA has the 6th highest state GDP in the country. Components thereof associated with port and industrial economic activity in the Philly region are higher than other Mid-Atlantic and Southeast I-95 corridor markets, with the exception of Florida.
Average HH Income - Phila metro and DC-Boston I-95 corridor HH income are still much higher than markets in the southeast experiencing high population and job growth.
Metrics for the 200 MSF Philadelphia industrial market, 4th in inventory, 3rd in population among 18 I-95 markets:
- Highest vacancy rate on I-95 (8-9%)
- 2nd in 2023 deliveries (Savannah)
- 3rd in YoY Sq Ft growth (~15%)
- Lowest YoY rent growth (~2%)
- $12-$15 PSF market- right about in the middle of the pack for the 18 I-95 corridor markets
- Under construction square feet are among the highest in corridor and the U.S.
The elevated vacancy rate is being pulled mostly by the Jersey side of the market- Burlington & Salem Counties, not Phila last mile and Collar Counties. The exception is Lower Bucks County Fairless Hills submarket, where Keystone Trade Center is being developed. On the ground, all of the urban Philly, collar interstate, exurban and rural submarkets are tight.
PhilaPort (The Port of Philadelphia), including Packer Avenue Marine Terminal, and FTZ #35 are a big economic driver of the Delaware River Port Complex spanning Jersey and Delaware. It’s the largest refrigerated port in the US and handles similar cargo as discussed in last week’s post about Baltimore via a 45’ main channel:
- Reefer and Dry Containers make up over half of commodity tonnage
- Auto RoRo, Forest, Break-bulk, Liquid-bulk
Port market positioning between New York City and Baltimore, robust rail service and highway network infrastructure have historically made Philadelphia and PA one of the country’s most important logistics states and strategic locations.
