PHILADELPHIA-Although an advance copy of second-quarter 2005 industrial market data from the local office of Grubb & Ellis shows little activity, Eustace Wolfington, SVP in that office, tells GlobeSt.com, "activity is definitely picking up. Yet rental rates are not even close to where they were four years ago," he says.
In lower Bucks County, for example, Wolfington says effective rates in the low- to mid-$3 per sf are common, despite average asking rates of $4.10 per sf. "We're starting to see landlords get smart and step down to retain tenants and create tenancy," he says, citing a recent lease for a "brand new, class A building that's been vacant for years rent in the low-$4-per-sf range."
The industrial vacancy rate in Bucks dropped 1% to 6.7% during the second quarter, according to the Grubb & Ellis data, and, in Philadelphia County, it was 6.2%, unchanged from the previous quarter. "Oddly enough, leasing in Northeast Philadelphia has been fairly brisk," says Wolfington. He attributes it to a scarcity of properties. "There has not been any spec industrial construction," he explains, "the only new product has been build-to-suit."
The Philadelphia County vacancy rate is the lowest throughout the MSA, which includes Camden, NJ and New Castle, DE as well as the Pennsylvania counties surrounding Philadelphia. The highest, 16.2%, is in Delaware County, while the overall average is 8.9%. The average asking rental rate for standard industrial product in the total market is $4.21 per sf, according to the Grubb & Ellis report.
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