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Philadelphia warehouse owners subdivide big-box space as tenants shrink
Five leases for newly built Philadelphia warehouses from Q1 2025 to Q2 2026 were for demised space, contributing to a 30-basis-point drop in the city’s industrial vacancy rate to 11.9%.
A post-pandemic wave of speculative big-box warehouse construction in Philadelphia is giving way to smaller, demised spaces as owners reposition projects for the tenant profiles actually taking space in the city, according to Bisnow.
Colliers Philadelphia Market Research data shows that all five leases signed for speculative, newly built Philly warehouses between Q1 2025 and Q2 2026 involved subdivided footprints. That shift in leasing structure contributed to a 30-basis-point decrease in the city’s industrial vacancy rate, which fell to 11.9% last quarter.
The vacancy rate remains well above levels seen when many of the big spec projects were planned or underway, with late 2022 vacancy cited at about 5%. KBC Advisors industrial and logistics real estate adviser Brad Boone said Philadelphia had not previously seen a large wave of new Class A supply before the pandemic, and that developers treated the market as a generic big-box opportunity without fully accounting for the city’s smaller-footprint, long-term tenant base.
Bisnow also reports that demand for big-box space has not matched earlier pandemic-era expectations. Greek Real Estate Partners managing partner David Greek said the company completed a 287,000 SF warehouse at 2121 Wheatsheaf Lane in North Philly last year, and while interest came from three potential full-building tenants, two chose suburban locations and the third is still evaluating options. Colliers vice president Adam Gorodesky said extended vacancy has pushed many owners toward multitenant lease-ups as market demand stands.