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State of Lehigh Valley Discussed at 2017 Commercial Real Estate Outlook

By Colin McEvoy on April 5, 2017

More than 500 people attended the 2017 Lehigh Valley Commercial Real Estate Outlook, hosted by the Greater Lehigh Valley Chamber of Commerce.

More than 500 people attended the 2017 Lehigh Valley Commercial Real Estate Outlook, hosted by the Greater Lehigh Valley Chamber of Commerce.

With more than 100 million square feet of total inventory, the Lehigh Valley is one of the largest industrial markets on the East Coast, and in the country.

That was one of the messages Lehigh Valley Economic Development Corporation (LVEDC) President and CEO Don Cunningham delivered during his speech at the 2017 Lehigh Valley Commercial Real Estate Outlook on April 4.

Speaking before a crowd of more than 500 people at the Holiday Inn in Upper Macungie Township, Cunningham said the regional industrial market grew by nearly 7 percent over the course of 2016, reaching a total inventory of 113.6 million square-feet.

“The industrial sector employs 24,000 people today, compared to 17,000 five years ago, and is projected to employ 30,000 over the next decade,” he said. “Vacancy rates are less than 4 percent, and that’s why you’re seeing properties built on spec: as quickly as s they are going up, they are getting filled.”

LVEDC President & CEO Don Cunningham speaking at the 2017 Lehigh Valley Commercial Real Estate Outlook.

LVEDC President & CEO Don Cunningham speaking at the 2017 Lehigh Valley Commercial Real Estate Outlook.

LVEDC was a presenting sponsor for the Commercial Real Estate Outlook, which was hosted by the Greater Lehigh Valley Chamber of Commerce.

In an address entitled “The State of the Valley,” Cunningham gave an overview of the Lehigh Valley economy and commercial real estate, in which he highlighted the region’s gross domestic product (GDP) having reached $37 billion for the first time in its history.

Particularly notable, Cunningham said, is the remarkable balance between the industry sectors, a sign of a multi-faceted and diverse economy. While most regions have a single dominant industry, the Lehigh Valley’s top sectors all fall within $650 million of each other.

Those sectors include manufacturing ($5.56 billion), finance and real estate ($5.47 billion), education and health care ($4.97 billion), and professional and business services ($4.86 billion).

“Our eggs are no longer all in one basket,” Cunningham said. “It’s a nicely balanced economy in the Lehigh Valley, and I think that’s probably one of the things we should be most grateful for.”

Cunningham also noted that the Lehigh Valley has been ranked by Site Selection magazine as one of the top five overall regions in the Northeastern United States in terms of economic development for 2016, falling behind only much larger regions like New York City, Philadelphia, Pittsburgh, and Boston.

Michael Adlerman, Vice President, Market Officer of Pennsylvania for Liberty Property Trust, said 56 percent of the industrial space in the Lehigh Valley is used for manufacturing, compared to 37 percent for logistics and 7 percent for e-commerce.

Lisa Pektor, President of PennCap Properties, provided an overview of the Lehigh Valley office market, which she said will continue to see strong growth and an influx of new tenants in the technology, healthcare, education, and business-to-business services sectors.

“Tenants seek to locate where there is ease of access to highways, and are choosing locations based on amenities for their employees,” she said. “Construction costs are increasing by about 5.6 percent annually, and those increases are going to cause an impasse to occur in what tenants are willing to pay in rental rates, and what new buildings we are able to build.”

Jerry Blecker, Vice President of Legal Affairs for King’s Development & Management Co., discussed the regional retail market. He said 2016 retail vacancy rates in the Lehigh Valley declined from 7.6 percent mid-year to 7.2 percent by year’s end.

The Greater Lehigh Valley Chamber of Commerce presented its 2017 Commercial Real Estate Development Awards during the event, which included:

GEDP Executive Director Jared Mast, accepting the award for the Easton Public Market, thanked LVEDC’s redevelopment program, the Lehigh Valley Land Recycling Initiative (LVLRI), for its assistance with environmental assessments for the project.

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Lehigh ValleyQuick Facts

  • Industry Spotlight

    14.2% of Labor Force
    Employed in Professional & Business Services
    Q4 2016

  • By the Numbers
    $37 Billion

    Gross Domestic Product

  • Investor Spotlight
    City Center Lehigh Valley
  • Industry Spotlight

    10.2% of Labor Force
    Employed in Manufacturing
    Q4 2016

  • By the Numbers
    $4.3 Billion

    Exports (2015)

  • Investor Spotlight
    Air Products
  • Industry Spotlight

    1325 Total Office Buildings

  • By the Numbers
    $58,134

    Median Household Income

  • Investor Spotlight
    PPL Electric Utilities
  • Industry Spotlight

    1707 Total Industrial Buildings

  • By the Numbers
    24,400

    New Jobs Created Over Past 5 Years

  • Investor Spotlight
    National Penn
  • Industry Spotlight

    4.8% Industrial
    Vacancy Rate

  • By the Numbers
    658,477

    Population

  • Investor Spotlight
    Olympus
  • Industry Spotlight

    8.8% Office
    Vacancy Rate

  • By the Numbers
    336,100

    Labor Force

  • Investor Spotlight
    Lutron Electronics
  • Industry Spotlight

    10% of Labor Force
    Employed in Leisure & Hospitality
    Q4 2016

  • By the Numbers
    4,359

    Technology Patents from 2000-2013

  • Investor Spotlight
    Mack Trucks
  • Industry Spotlight

    1.6% of Labor Force
    Employed in Food & Beverage Manufacturing
    Q4 2016

  • By the Numbers
    25 Million

    Office Inventory (Square Feet)

  • Investor Spotlight
    UGI
  • By the Numbers
    108 Million

    Industrial Inventory (Square Feet)

  • Investor Spotlight
    NFI