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PHILADELPHIA-The third quarter industrial vacancy rate edged up just 0.6% in third quarter, compared with the quarter before, resting at 10.4%, according to research from the local office of CB Richard Ellis. Despite the slight rise, however, the CBRE report notes that industrial vacancies remain low in comparison with 2002.

Furthermore, the outlook is brightening because large blocks of contiguous industrial sublet space are scarce throughout the region. “There is virtually no sublet space on the market in Philadelphia County, for example,” CBRE reports. In addition, new construction is under way only in Bucks County among all 10 of the counties CBRE studies. Of the 10, five surround Philadelphia, another is the Lehigh Valley, PA market, and the remaining four are in Delaware and Southern New Jersey.

Of the Pennsylvania counties, at 17.4%, the Lehigh Valley market has the highest vacancy rate. At 4%, Chester County has the lowest and, not incidentally, among the highest average asking rental rates–$5.59 per sf. The average asking rental rate in Montgomery County is $7.06 per sf, the highest of all in the area, and the vacancy rate there is 10.2%.

Philadelphia County’s vacancy rate reached 12.4% during third quarter and the average asking rental rate remained at $4.12 per sf, exactly the same as in Delaware County, where the vacancy rate is just 5.3%, according to CBRE.

“Average asking rates maintained,” despite the slight uptick in vacancy rates,” say CBRE analysts. “As the market becomes increasingly stable, owners will no longer need to offer their properties at below market rates in order to entice tenants and gain occupancy,” they predict.

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