Northeast U.S. Industrial & Logistics Construction Watch Q4 2022

The Northeast I&L development pipeline decreased in Q4 2022 to 68.5 million sq. ft. under construction. The Philadelphia Metro and PA I-78/I-81 Corridor markets claimed a combined 49.2 million sq. ft. of those projects, accounting for 71% of all construction across the Northeast markets.  Pre-leasing rates declined with 24% of space pre-leased, down from 30% last quarter. Construction deliveries decreased this quarter, recording 16.3 million sq. ft. of completions, a 4% decrease quarter-over-quarter. 

The decrease in deliveries and slowing construction pipeline will do little to help occupiers, but an increase in the vacancy rate points towards the market reaching a post-pandemic equilibrium. The average vacancy rate for the Northeast rose 60 basis points (bps) quarter-over-quarter to 3.5%. Average asking rents continue to climb, reaching $13.95 in Q4 2022.