Don’t expect Central Pennsylvania’s industrial real estate market to hit a ceiling anytime soon, as demand for space continues to outstrip supply, according to the latest market research by real estate firm CBRE Group Inc.
The inventory of industrial real estate in Central Pennsylvania, which includes Cumberland, Dauphin, Franklin, Lancaster, Lebanon and York counties, stood at nearly 161 million square feet at the end of the second quarter.
Industrial real estate refers primarily to warehouse and distribution facilities.
It is the largest industrial market in the state. When added to the larger Greater Philadelphia region, it is the second largest industrial market in the country, trailing only the massive Inland Empire market in southern California.
Over the last year, occupied space in Central Pennsylvania has increased by more than 6 million square feet, according to CBRE’s Ian Anderson, director of research and analysis. Occupancy is about 94 percent in the market, with rents up 7.7 percent as new warehouse space has come online.
“Clearly, it’s a market that is still in demand,” he said.
Indeed, CBRE is tracking about 13 million square feet of demand from tenants currently looking for space in Central Pennsylvania and surrounding markets in the Lehigh Valley and Northeast Pennsylvania.
Only about 9 million square feet is in development.
The labor market has tightened, however, which could challenge industrial developers looking to put up new buildings. On the other hand, wages are rising, and local brokers have said the strong highway network in the midstate can help attract workers from across the region.
“When I look at the stats, I still think this market is going to remain stable for at least the next year,” Anderson said.