CBRE

FIGURES|PHILADELPHIAINDUSTRIAL|Q42025

Leasingmomentumholdsassupply

remainselevated

r11.0%

VacancyRate

43,198

SFNetAbsorption

3.6M

SFConstructionDelivered

3.3M

SFUnderConstruction

$12.63

NNN/YRDirectLeaseRate

Note:Arrowsindicatechangefrompreviousquarter.

–Netabsorptionwaspositive43,198sq.ft.,adeclinefromthepositive829,052sq.ft.oflastquarter.

–Leasingactivityin2025posted14.0millionsq.ft.ofneworexpansionleasessigned,slightlybetterthanlastyear’stotalof12.7millionsq.ft.

–3.6millionsq.ft.ofnewsupplywasaddedthisquarterdespitestickyvacancy.Asaresult,totalvacancyslightlyincreasedto11.0%fromthe10.2%seenlastquarter.

Thesharpleasingreboundseenfollowingaslowdownatthestartoftheyearcontinuedintothefinalquarterof2025.Despitecontinueduncertaintysurroundingtariffsbroadermacroeconomicconcerns,4.8millionsquarefeet(sq.ft.)ofneworexpansionleasesweresignedthisquarter,

acceleratingfromlastquarter’spaceof2.5millionsq.ft.Leasingactivityacceleratedafter

slowingatthestartoftheyearastariffswereeithernegotiatedorrolledbackentirely,abatingmuchoftheconcernsthatarosearoundthatpolicyshift.Asaresult,themarketendedtheyearwith874,000sq.ft.ofpositivenetabsorptiondespitehoveringaroundzeroatmid-year.

FIGURE1:HistoricalAbsorption,Deliveries,andVacancy

Sq.Ft.millions

12.010.08.06.04.02.00.0(2.0)

Vacancy%

12

10

8

6

4

2

0

NetAbsorptionDeliveriesVacancyRate

Source:CBREResearch,Q42025

1CBRERESEARCH?2026CBRE,INC.

FIGURES|PHILADELPHIAINDUSTRIAL|Q42025

2CBRERESEARCH?2026CBRE,INC.

ClassAlogisticscontinuedtopoststeadydemandgrowthwhileanewmanufacturing/bottlingfacilityforDrinkPAKatHRPGroup’sBellwetherDistrictprojectaccountedfornearlyone-thirdofleasingactivitythisquarter.DrinkPAKplansonmixing,canning,andpackagingproductatthisfacilitythatwillbeoperationalbyearly2027.Thiswasthefirstleasesignedatthenew

mixed-useprojectattheformerPhiladelphiaEnergySolutionsrefinerysite.

Supply

Constructiondeliveriestotaled3.6millionsq.ft.thisquarter,bringingthe2025annualtotalto11.5millionsq.ft–aslightincreasefromthepreviousyear’stotalof8.2millionsq.ft.butstill

belowthehighsof2023whichpostedanannualtotalof21.1millionsq.ft.Thesharpdecline

from2023reflectsmorecautiousgroundbreakingsaimedatcounteringoversupplyand

elevatedvacancyacrossthemarket.Tonote,totalconstructionstartsin2025amountedto4.3millionsq.ft.,asteepdropfrom10.9millionsq.ft.in2024.Furthermore,nonew

groundbreakingswerereportedthisquarter,underscoringthesignificantpullbackindevelopmentasthemarketworksthroughelevatedsupply.

ClassAdistributionandlogisticsvacancyendedtheyearat26.5%,upfrom24.3%lastquarteras3.6millionsq.ft.ofnewsupplydeliveredthisquarterwithonly774,000sq.ft.ofClassA

positivenetabsorption.BurlingtonCountyremainedthestandoutsubmarketwithvacancyat9.9%,demonstratingcontinuedtenantdemandformodernlogisticsfacilitiesinkeylocations.

Demand

Flight-to-qualitytrendspersistedasnearly7.2millionsq.ft.ofleasingactivitywasinkedin

ClassAlogisticsfacilitiesduring2025,slightlylessthanlastyearbutgreaterthan2022and

2023totals.MostoftheleasingactivitywasconcentratedintheSouthernNewJerseyportionofthemarketasthisportionofthemarketishometo58.8millionsq.ft.ornearlytwo-thirdsofthePhiladelphiaMetro’sClassAinventory.OutsideofDrinkPAK’smanufacturingleaseatthe

BellwetherDistrict,SouthernNewJerseysecuredthelargestlogisticsleasesignedthisquarterwithCirro’s750,787sq.-ft.dealat2300MountHollyRoad,reaffirmingthesubmarket’sappealtotenantsseekingefficientlogisticsspace.

Whilethemarketendedtheyearwithnearly900,000sq.ft.ofpositiveabsorption,only43,198sq.ft.ofpositiveabsorptionwasrecordedduringQ42025.Thisreflectsthecombinedimpactsofconsolidationandflight-to-qualitytrends.Asdecision-makersbecamemorepriceconscious,

FIGURE2:LeasingActivityTrend

6.0

5.0

4.0

3.0

2.0

1.0

Sq.Ft.millions

0.0

Source:CBREResearch,Q42025

FIGURE3:KeyLeaseTransactions

TenantSq.Ft.LeasedTransactionTypeAddressSubmarket

1,404,000

DrinkPAK

SoutheastPA

NewLease

3144WPassyunkAve

750,787

SouthernNJ

Cirro

NewLease

2300MountHollyRd

613,920

Confidential

Renewal

SouthernNJ

309CedarLn

BunzlRetailServices388,299Renewal3600ProgressDrSoutheastPA

DVMPowerControl

266,880

NewLease

1600DelpDr

SoutheastPA

FederalExpress

Corporatation

257,875

Renewal

5CommerceDr

SouthernNJ

GXOLogistics

194,660

Renewal

3000AmDr

SoutheastPA

Stylex

157,716

NewLease

2000BishopsGateBlvd

SouthernNJ

ConfidentialTenant

138,391

Renewal

500MarylandDr

SoutheastPA

RheemAirDistribution99,783NewLease1480GrandviewAveSouthernNJ

Wayfair

98,030

Renewal

15CampusDr

SouthernNJ

Source:CBREResearch,Q42025

FIGURES|PHILADELPHIAINDUSTRIAL|Q42025

3CBRERESEARCH?2026CBRE,INC.

manywerechoosingtoconsolidatefrommultipleoutdatedClassBorCpropertiesintoasingle,well-locatedClassAassetandcreatingnetvacancyasaresult.Astheconstructionpipeline

coolsanddemandforClassAlogisticsspacepersists,vacancyisexpectedtoreachpeakvacancyduring2026.

Pricing

ExceptforBurlingtonCounty,rentalratesdeclinedacrossthemarketaspersistentoversupplyandelevatedvacancycreatedatenantfavoredenvironment.Inmanysubmarkets,pricingfell10–15%yearoveryear.Amidpersistentoversupply,landlordsareofferingmoregenerous

concessionssuchasextendedfree-rentperiodsandlargertenant-improvementpackagestodrawtenantstotheirbuildings.Withampleoptionsavailable,tenantshavegreaterflexibilitytoselecthigh-quality,well-locatedClassAspace.Asaresult,landlordsareassembling

increasinglycompetitiveconcessionpackagestoattractnewtenantsandretainexistingones.

EconomicOverview

TheU.S.economyissendingsomemixedsignals.Financialmarketsarefocusedontheupside,particularlyAI’ssizablecontributiontogrowthinrecentquarters.Someindicatorsofbusinessactivity,suchascapitalgoodsorders,areimproving,andstrengtheningcreditmarketsare

helpingtousherrealestateintoanewcycle.

Thepicturegetsmoremelancholywhenlookingathouseholds.Consumerconfidenceremainsweak,withspendingreportedlydrivenbyasmallersegmentofaffluenthouseholds.ThismosaicofdatasuggeststhatannualaverageGDPgrowthwillbesteadyin2026,at2%,butatouch

softerthanin2025.Akeycatalystisasofterlabormarket,ascompaniesare‘slowtohire,slowtofire’—atrendthatislikelytolastafewquarters.Aconsequenceofthisoutlookissofter

inflationandlong-termbondyieldstrendingjustbelow4%byH22026.

FIGURE4:NetAbsorptionTrend

Sq.Ft.millions

2.0

1.5

1.0

0.5

0.0

(0.5)

NetAbsorptionRolling4QAvg.

Source:CBREResearch,Q42025

FIGURE5:ConstructionActivity

Sq.Ft.millions

20.0

15.0

10.0

5.0

25.0

0.0

UnderConstructionDeliveries

Source:CBREResearch,Q42025

FIGURES|PHILADELPHIAINDUSTRIAL|Q42025

4CBRERESEARCH?2026CBRE,INC.

MarketStatisticsbySize

NetRentableArea

TotalVacancy

TotalAvailability

DirectAvailability

SubleaseAvailability

Avg.DirectAsking

Rate(NNN/YR)

CurrentQuarterNet

AbsorptionYTDNetAbsorption

Deliveries

UnderConstruction

Under100,000sq.ft.

112,337,675

6.3

6.3

5.5

0.8

11.83

(253,662)(1,380,096)

0

80,000

100,000-199,999sq.ft.

81,138,918

7.4

8.3

7.7

0.6

11.45

312,157515,110

366,470

732,775

200,000-299,999sq.ft.

51,412,080

9.0

8.6

7.9

0.7

12.31

314,179772,315

1,106,311

1,871,590

300,000-499,999sq.ft.

58,577,303

17.2

17.4

15.2

2.1

13.76

(197,152)(523,683)

656,904

644,200

500,000-749,999sq.ft.

37,353,541

25.3

23.9

23.6

0.3

12.87

(673,978)(368,268)

1,431,272

0

750,000sq.ft.

54,194,907

11.5

11.5

9.3

2.2

11.86

541,6541,858,791

0

0

Total

395,014,424

11.0

11.0

9.9

1.1

12.63

43,198874,169

3,560,957

3,328,565

MarketStatisticsbyProductType

NetRentableArea

TotalVacancy

TotalAvailability

DirectAvailability

SubleaseAvailability

Avg.DirectAsking

Rate(NNN/YR)

CurrentQuarterNet

AbsorptionYTDNetAbsorption

Deliveries

UnderConstruction

Distribution/Logistics

293,933,882

13.1

13.1

11.9

1.3

12.74

(59,365)1,608,239

3,560,957

3,195,565

Manufacturing

57,532,515

3.7

4.1

3.9

0.2

9.29

154,754(108,860)

0

0

R&D/Flex

33,953,972

7.8

7.4

6.2

1.3

13.89

(57,208)(564,815)

0

133,000

OtherIndustrial

9,594,055

1.3

1.3

1.3

0.0

11.66

5,017(60,395)

0

0

Total

395,014,424

11.0

11.0

9.9

1.1

12.63

43,198874,169

3,560,957

3,328,565

FIGURES|PHILADELPHIAINDUSTRIAL|Q42025

5CBRERESEARCH?2026CBRE,INC.

MarketStatisticsbySubmarket

Avg.DirectAskingCurrentQuarterNet

NetRentableArea

TotalVacancy

TotalAvailability

DirectAvailability

SubleaseAvailability

Rate(NNN/YR)

Absorption

YTDNetAbsorption

Deliveries

UnderConstruction

BucksCounty

56,739,345

11.6

11.6

10.0

1.6

$12.50

-420,172

479,694

263,000

208,980

ChesterCounty

23,270,816

7.1

7.6

7.1

0.6

$14.69

-162,058

-145,654

0

0

DelawareCounty

21,074,981

7.5

7.5

6.7

0.8

$14.52

-30,154

-219,573

0

105,000

MontgomeryCounty

55,938,154

10.4

10.1

9.0

1.0

$10.95

-258,040

-510,888

442,880

0

PhiladelphiaCounty

60,030,019

11.9

12.2

10.2

2.0

$15.00

28,857

-1,252,665

1,666,431

322,575

SoutheastPATotal

217,053,315

10.5

10.5

9.2

1.4

$13.34

-841,567

-1,649,086

2,372,311

636,555

BurlingtonCounty

66,507,718

9.9

10.0

9.2

0.8

$12.34

638,540

2,864,612

1,188,646

1,525,044

CamdenCounty

27,456,117

6.3

6.3

6.1

0.2

$11.88

33,534

-310,957

0

0

GloucesterCounty

37,456,700

11.2

10.3

9.0

1.3

$12.00

237,607

-469,068

0

1,023,966

SalemCounty

12,230,853

42.1

41.7

41.4

0.3

$12.10

-33,000

168,830

0

0

SouthernNJTotal

143,651,388

12.3

12.1

11.3

0.8

$12.14

876,681

2,253,417

1,188,646

2,559,010

NewCastleCounty

34,309,721

8.9

9.8

9.2

0.5

$11.12

8,084

269,838

0

133,000

NorthernDETotal

34,309,721

8.9

9.8

9.2

0.5

$11.12

8,084

269,838

0

133,000

PhiladelphiaTotal

395,014,424

11.0

11.0

9.9

1.1

$12.63

43,198

874,169

3,560,957

3,328,565

FlGURES|PHlLADELPHlAlNDUSTRlAL|Q42025

MarketAreaOverview

Definitions

AvailableSq.Ft.:Spaceinabuilding,readyforoccupancywithinsixmonths;canbeoccupiedorvacant.AvailabilityRate:Total

AvailableSq.Ft.dividedbythetotalbuildingArea.AverageAskingLeaseRate:Acalculatedaveragethatincludesnetandgross

leaserate,weightedbytheircorrespondingavailablesquarefootage.BuildingArea:Thetotalfloorareasq.ft.ofthebuilding,

typicallytakenatthe“dripline”ofthebuilding.GrossActivity:Allsaleandleasetransactionscompletedwithinaspecifiedtimeperiod.Excludesinvestmentsaletransactions.GrossLeaseRate:Renttypicallyincludesrealpropertytaxes,buildinginsurance,

andmajormaintenance.O-NetAbsorption:ThechangeinOccupiedSq.Ft.fromoneperiodtothenext.A-NetAbsorption:The

changeinAvailableSq.Ft.fromoneperiodtothenext.NetLeaseRate:Rentexcludesoneormoreofthe”net”costs(realproperty

taxes,buildinginsurance,andmajormaintenance)typicallyincludedinaGrossLeaseRate.OccupiedSq.Ft.:BuildingAreanot

consideredvacant.VacancyRate:TotalVacantSq.Ft.dividedbythetotalBuildingArea.VacantSq.Ft.:Spacethatcanbe

occupiedwithin30days.ClassAindustrialarebuildingsbuiltafter2000,with32,orgreaterclearheightandESFRsprinklers.

Contacts

JoeGibson

AssociateDirectorofResearch,Pennsylvania