3Q County Industrial Vacancy Rate Dips to 13.4%

PHILADELPHIA-The vacancy rate in the county’s industrial market during third-quarter 2002 dipped to 13.43%, “showing a slight improvement over second-quarter vacancy of 13.7%,” says Paul Torosian, principal of the local office of Dallas-based Trammell Crow Co. “While leasing activity has remained consistent over the past three quarters, year-to-date net absorption remains negative and will unlikely rebound to positive figures by year-end, he says.

Leasing averages about 425,000 sf a quarter.

Torosian attributes the lack of positive net absorption to the industrial building stock in the county, which consists primarily of second- and third-generation properties that lack the amenities many large distribution companies want.

Yet, Keystone Opportunity Zones, which provide considerable tax relief, and access to ports appeal to certain companies, Torosian contends.

One such company is R.M. McNulty, which paid $1.3 million, or $29.15 per sf, for a single-story, 44,595-sf warehouse property near Northeast Philadelphia Airport. Another is Mothers Work, Inc., which leased 63,000 sf in the Philadelphia Naval Business Center, a KOZ, and also received $2 million in financing for improvements.

The average asking triple-net rental rate for industrial properties in the country remains flat at $4.35 per sf, according to the third-quarter report.

Larry Maister, vice president, and Marie Connell, senior associate in the local Trammell Crow office, participated with Torosian in researching and authoring the report.