State of Lehigh Valley Discussed at 2017 Commercial Real Estate Outlook
By Colin McEvoy on April 5, 2017
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 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:
- 2017 Vision Award: The Goldenberg Group and TCH Development for the $140 million Hamilton Crossings retail complex
- 2017 Community Development Award: Lehigh Valley Carpenters for the Joint Apprenticeship Training Center
- 2017 Adaptive Reuse Award: Greater Easton Development Partnership (GEDP) for the Easton Public Market
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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