Tyco Healthcare's exit from approximately 442,000 sf in Malvern is a chief culprit of lost ground in the suburbs, reports Matthew Guerrieri, research services manager. This "large-space dump," he says, combined with enough other vacated space "to drive the absorption total into negative territory once again."
Another culprit is a lack of job growth, says Guerrieri. The Philadelphia region added 11,900 new jobs in the past year, he says, "however, the modest job growth was concentrated in professional and business services, education and health, and leisure and hospitality, all of which do not contribute to the industrial leasing market." While trade, transportation and utilities added 2,200 jobs during that timeframe, "that growth was offset by reductions in manufacturing."
Despite the rising vacancy, "industrial rents have remained relatively steady over the past few years," he says. The average asking rental rate for industrial space throughout the nine-county area is $4.41 per sf, and the flex space overall average is $8.47 per sf, according to G&E.
Chester County commands the highest asking rates of $5.25 per sf for industrial space and $9 per sf for flex space. The vacancy rate there is just 6.2%, the lowest in the region. Year-to-date absorption there, however, is a negative 565,987 sf.
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