Pennsylvania I-78/I-81 Corridor Industrial Figures Report Q3 2023

During the second quarter of last year, the PA I-78/I-81 Corridor pipeline reached peak supply with 37.4 million square feet (sq. ft.) under construction while posting its lowest pandemic-era vacancy rate, 3.7%. That limited vacancy and the delivery of new premium space spurred rent appreciation on the order of 10% per quarter over the last 4 quarters. Over the same period, construction starts declined as developers reacted to rising vacancy with class A sitting at 11.2% at the end of Q3 2023. With fewer barriers to entry than the neighboring Philadelphia Metro market, developers are leery of creating oversupply, preferring to wait for build-to-suit projects. And while an uptick in new supply drove vacancy higher, If delivered today the current 9.6 million sq. ft. under construction would require 2.5 quarters to be fully absorbed, based on 2023 absorption levels. In total, the market was nearing a more balanced supply and demand landscape.