The industrial real estate market has entered a period of clear bifurcation, as older facilities fall out of favor while modern warehouses continue to capture tenant demand. Properties constructed prior to 2010 are experiencing sustained negative absorption, reflecting a fundamental shift in how occupiers evaluate industrial space.
Across the Philadelphia region, older industrial buildings posted a trailing occupancy decline of 2.6 million square feet in the third quarter of last year, while facilities built after 2010 achieved occupancy gains totaling 8.6 million square feet. This divergence intensified throughout 2025, with pre-2010 assets recording a net annual occupancy loss of 10.7 million square feet, compared to a 7.9 million square-foot gain among newer buildings by the end of the third quarter.
Logistics and warehouse-distribution users are increasingly prioritizing modern specifications that legacy properties struggle to accommodate, including clear heights exceeding 32 feet, advanced fire suppression systems, energy-efficient LED lighting, and infrastructure capable of supporting automation and robotics.
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