Greater Philadelphia industrial fundamentals are strong, but that's not the only reason the future's bright for the market, according to the speakers at Bisnow's fifth annual Philadelphia Industrial Update at the Loews Philadelphia Hotel. Geographically, eastern PA's in the right place to take advantage of the e-commerce revolution.
The speakers noted that the boom of e-commerce is radically changing distribution. There's tremendous pressure to deliver goods fast. As one speaker put it with only slight exaggeration, "You can order something with your iPhone while driving down the highway, and expect it to be at home when you get there." In industrial site selection, there's a new emphasis on proximity to population as a heavily weighed factor.
Fortunately for eastern Pennsylvania and South Jersey, their location is good to serve the heavily populated areas of the Northeast. In fact, the region has access within less than a day to 50% of the US population. Thus e-commerce-oriented tenants helped drive a tremendous amount of leasing in eastern PA, especially in 2014, but continuing this year and into the foreseeable future. Snapped: Drinker Biddle & Reath partner Chris Boyle, who moderated, Cushman & Wakefield executive director Gerard Blinebury, and First Industrial Realty Trust senior regional director Jeffrey Thomas.
The region also has the advantages of a solid transit infrastructure and workforce at hand, our speakers explain. But land is a little tight: it's hard for industrial to find good sites with access to highways that aren't going to be some other kind of commercial or residential development. For the first time during this cycle, there's industrial redevelopment of brownfield sites, especially in places such as York, Lancaster, Allentown and Bethlehem. Shown are Endurance Real Estate Group president Benjamin Cohen and Exeter Property Group principal Matt Brodnik.
Big blocks of space are also increasingly scarce, particularly in the Lehigh Valley. Though there's been a compression of cap rates recently, there's still a lot of capital that wants to get into industrial space in eastern PA, because the fundamentals support the investment—there's demand for that lessened supply. When anything of size comes up, there's tremendous interest in it. Also speaking were Dermody Properties SVP-capital deployment Jeff Zygler, Pureland partner Charlie Walters and DCT Industrial SVP Frank Petkunas.
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