New construction and lots of it is the overwhelming theme in Eastern Pennsylvania. There is currently almost 13.1 million square feet underway as of the end of the 3rd quarter. This is the highest quarterly total in the current market cycle, which had peaked at 8.7 million square feet in the previous quarter. Deliveries at this point in the year trail 2014 slightly, but will surpass it by year end with total expected deliveries of 10.25 million square feet. This trend will continue, as there is another 8 million square feet scheduled to deliver by the end of the 2nd quarter in 2016. Year over year, the Eastern Pennsylvania bulk industrial market has expanded at a rate of early 6.25%.
Even with all of the new construction, the vacancy level remains healthy, though it is slightly higher at the end of the 3rd quarter than at the beginning of 2015. Currently the vacancy rate stands at 3.8%, and will likely increase given the 3.8 million square feet of anticipated deliveries in the 4th quarter of 2015. The vacancy level should finish the year around 4.31% overall.
The 3rd quarter turned in a significant increase in completed occupier transactions over the 2nd quarter, but the year to date total still lags behind the same period in the previous three years. Given an increased level of occupier activity in the market, we anticipate a strong 4th quarter that should hopefully push overall occupier transactions to over 11 million square feet for the year. Absorption has remained positive and the end of the 3rd quarter totaled 5.27 million square feet, however it is likely that 2015 will be the first year in this current cycle where deliveries outpace absorption.
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