Philadelphia’s industrial real estate market is booming, ranking third nationwide for sustained rent growth among major markets. Over the last five years, rents have soared by 57.6%, far exceeding the national average of 41.7%. For tenants, this rapid growth means waiting to renew a lease could have serious financial consequences.
Consider a tenant leasing a 200,000-square-foot warehouse. If their lease was signed in 2019 at $6 per square foot, they were paying $1.2 million annually. Today’s market rates could push that rent to $1.88 million annually—a staggering $680,000 increase. By starting renewal discussions early, tenants can explore options like a blend-and-extend strategy. For example, a tenant with two years left on their lease might negotiate a longer-term renewal now, blending the current lower rate with the expected market rate, saving significantly over time.
Philadelphia’s prime location, within a day’s drive of over 40% of the U.S. population, combined with the growing Port of Philadelphia, continues to drive demand. The port, which recently reached a record 750,000 TEUs, forecasts doubling cargo volume by 2040. The need for nearby industrial space will only increase, creating further competition for warehouse leases.
To protect your bottom line and secure favorable terms, start renewal discussions early. Leveraging strategies like blend-and-extend can help mitigate steep increases while ensuring long-term stability in one of the nation’s most vital logistics hubs.
