Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Industrial Markets to Watch. Not the largest or the most actively contested markets, the 2015 Industrial Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Industrial Market to Watch: Philadelphia, PA
The Philadelphia and Southern New Jersey industrial markets have shaken off any inertia from the Great Recession. New construction brought more than 8 million square feet to market, almost all on the eastern side of the Delaware River. The vacancy rate fell below 10%, reflecting stronger absolute absorption than any other market in the country. Asking rents increased by just under 3% in 2014 and posted comparable annualized gains in the first quarter of 2015.
Manufacturers in the Philadelphia region are generally gearing up for expanded employment, capital expenditures, and higher output in 2015. Several industrial tenants have announced or are mulling over investments in the redeveloped mixed-use Navy Yard campus, including DuPont spinoff Axalta Coating Systems. With the support of tax credits valued at more than $250 million, Holtec International announced plans to build a 600,000 square foot manufacturing facility in nearby Camden, New Jersey to manufacture modular nuclear reactors and nuclear fuel storage containers. Deli meat manufacturer Dietz & Watson is expanding its Philadelphia headquarters and taking part in the redevelopment of the Frankford Arsenal in order to replace its main warehouse and distribution facility in Delanco, New Jersey, which was destroyed in an 11-alarm fire.
Brick-and-mortar stores and online retailers alike are taking more warehouse space in the region in order to satisfy orders. The Lehigh Valley saw large warehouses snapped up by Crayola, Walmart and e-retailer Zulily.com. With the announcement that Amazon will expand its same-day delivery service to Philadelphia, it busied itself expanding its regional distribution network to handle the new loads.
To read more on Philadelphia and other top industrial markets, download the full version of the 2015 Industrial Market Update report here.
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