Philadelphia is one of the best U.S. markets for industrial real estate, new report says
The area increased its inventory of industrial real estate by 4.1 million square feet in the first quarter of 2025.
Philadelphia, with more than 4 million square feet of new industrial space in the first quarter of 2025, is among the strongest industrial real estate markets in the country, according to a new ranking.
CommercialCafe, an online real estate listing platform, ranked 30 major industrial markets using metrics for the first few months of 2025.
Philadelphia came in fourth.
Phoenix was No. 1, followed by Houston and Inland Empire, a metropolitan area in California. That makes Philadelphia area the top industrial market on the east coast.
Industrial real estate encompasses properties that are used for production, manufacturing, and warehousing of goods, among other purposes.
» READ MORE: Millions of square feet of warehouses have dramatically altered the Philly area. Towns are starting to push back.
The ranking criteria included the amount of vacant industrial real estate as well as average sale and rent price per square foot.
Online search interest for the area in that market was also considered, as well as the amount of new real estate built and in the pipeline.
In Philadelphia, the amount of new industrial space created this year, as well as average sale price and growing search interest, contributed to the area’s high ranking.
More inventory, higher prices, and maturing loans
Philadelphia increased its inventory of industrial real estate by nearly 1% or roughly 4.1 million square feet in the first quarter of 2025 — only Phoenix and Dallas Fort-Worth added more square footage.
At the end of the first quarter of this year, the Philadelphia area also had nearly 8.8 million square feet of industrial space under construction. By comparison, Dallas-Fort Worth has 25.5 million under construction and Phoenix has 15.7 million.
The Philadelphia area has seen a boom of warehouse space in recent years, The Inquirer has previously reported.
From 2020 to mid-2024, some 55 million square feet of new warehousing space was built or planned. That was, in part, an effort to keep up with increased demand due to the proliferation of online shopping.
While industrial construction has continued in Philadelphia, the vacancy rate has increased slightly to 7.9% in the first few months of 2025 compared to the end of 2024.
Among the top 10 commercial real estate markets in the report, the vacancy rate ranges from around 5% to 10%. Vacancies are higher overall in 2025 compared to past years, the report indicates.
The new report also notes that the average sale price of a square foot of industrial real estate in Philadelphia went from $116 to $129 in the last year.
Of the 30 areas analyzed, 16 saw average price per square foot increase.
The most expensive market for industrial space is Orange County, California, at $302 per square foot. Space in Baltimore and Miami costs $145 and $236 per square foot, respectively. On the lower end, industrial space in Memphis and St. Louis is roughly $60 per square foot.