L
ee & Associates of Eastern Pennsylvania has released its 2024 Fourth Quarter Industrial Report, analyzing the region's logistics real estate market. Despite increasing vacancy rates and speculative developments, the report notes that the region is showing relative resilience compared to national trends.

    U.S. industrial vacancy rates have risen steadily throughout 2024, but Eastern Pennsylvania maintains lower vacancy rates, with some submarkets demonstrating positive absorption despite oversupply pressures. In Central Pennsylvania, vacancy rose from 5.33% to 5.80% in Q4 due to new construction deliveries, although 87% of that space was pre-leased.

    Leasing activity totaled 1.6 million square feet, driven by strong Class A leasing throughout the year. However, the Lehigh Valley saw a significant increase in vacancy, fueled by minimal leasing and vacant speculative deliveries. Heather Kreiger, regional research director at Lee & Associates, notes that while oversupply poses challenges, it also presents opportunities for tenants to secure high-quality spaces.

    Developers are showing resilience by aligning new construction with market realities, which will be crucial for rebalancing supply and demand in 2025. The region remains a robust and active industrial market, desirable for logistics activity due to its strategic location and infrastructure. To stabilize the market, Lee & Associates expects sustained leasing activity and strategic absorption.

    Developers are adjusting their pipelines, signaling a cautious yet optimistic approach to long-term growth. As the region adapts to changing market dynamics, its location and infrastructure will remain critical to its success.