Cap Rates Under 3.5% Emerge in Philadelphia’s Industrial Market for the First Time

Philadelphia’s industrial market continues to break records, with leasing running well ahead of new construction and rent growth of 12% over the past 12 months, ranking it among the fastest of any major market in the United States.

But the industrial market’s most notable milestones of the third quarter centered around sales pricing. With the office sector no longer seen by many as the safe harbor for institutional capital that it was prior to the pandemic, large commercial real estate firms are searching for other types of long-leased, lower-risk properties in which to invest.

The recent wave of industrial development along the Interstate 95 corridor is delivering a new generation of giant logistics facilities capable of absorbing at least some of this investor demand. In the process, capitalization rates under 3.5%, while already common in other U.S. industrial markets such as Los Angeles and Northern New Jersey, are emerging in the Philadelphia area for the first time.

*Article courtesy of Costar

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