Philadelphia industrial real estate market reports

The total vacancy rate across the Philadelphia industrial market has increased 50 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 leasing volume in Q3 ‘25 measured 6.7 MSF, bringing the year-to-date (YTD) total to 25.9 MSF. This equates to a 15% decrease in annual leasing volume, compared to the same point in time last year, and a 40% quarterly decrease in leasing volume from the 11.2 MSF leased in Q2’ 25. This was the markets second consecutive quarter of negative absorption, a first for the market in over 10 years, finishing the third quarter at -1.07 MSF.

After four consecutive quarterly decreases in active development, total SF under construction across the market rose 4.5%, from 13.5 MSF in Q2 ’25 to 14.1MSF by the close of Q3 ’25. Institutional development remains active across the Philadelphia industrial market, currently with 70% of the active developments being led by institutional developers and investors.