Philadelphia Industrial Market Faces Rising Vacancy and Sublease Surge as Absorption Lags

The total vacancy rate across the Philadelphia industrial market has increased 50 basis points (bps) since last quarter, from 8.9% in Q2 ’25 to 9.4% at the close of Q3 ’25. A glut of vacant new product combined with historically low levels of absorption; continue to create strong headwinds, as the market works to return toward equilibrium.
Total available sublease space increased at the highest pace in more than a year, rising 20%, from the 14.6 MSF of available sublease space in Q2 ’25, to 17.5 MSF at the end of Q3 ’25. Large contiguous blocks of space have been the greatest contributor to the sharp increase, with 8.5 MSF of the total available sublease space located in buildings 500 KSF+. Tenants right sizing their space in tandem with the economic uncertainty from new tariffs are driving this increase in sublease availability.
Large format buildings continue to see the greatest amount of vacancy across the market. The 250-499 KSF and 500 KSF+ building size groups currently have the highest total vacancy rates, finishing Q3 ’25 at 11.7% and 10.2%, respectively.

November 19, 2025

US-PA-PHL Philadelphia