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Lehigh Valley Business Real Estate and Development Symposium Held

By Colin McEvoy on March 10, 2016

More than 500 business, construction, real estate, and economic development professionals attended the Lehigh Valley Business 2016 Real Estate & Development Symposium on Feb. 9, held at DeSales University in Upper Saucon Township.

The Lehigh Valley Economic Development Corporation (LVEDC) was a major sponsor for the event, and LVEDC President and CEO Don Cunningham was among the speakers, providing an overview of the Lehigh Valley industrial market.

Cunningham discussed major 2015 business development projects for the region, and spoke about the increase in international investment and the rise of e-commerce in the Lehigh Valley. Among the projects he highlighted were Zulily, Primark, Norac, Safran, Fuling Plastics, and SunOpta.

“As most of you in this room know, the industrial market in the Lehigh Valley remains strong,” Cunningham said. “The region’s industrial market had a 7 percent vacancy rate at the end of 2015. Quite often what we’re experiencing across the market is a demand for product and a demand for space.”

Keith Aleardi, CFA, Senior Vice President, and Chief Investment Officer with Fulton Bank, delivered a keynote speech about the economic forecast, both for the Lehigh Valley and the rest of the country. He noted the Lehigh Valley’s GDP, which reached a record-high $35.4 billion last year, has been increasing at a rate faster than the rest of Pennsylvania and the United States.

“The economy locally is looking better than nationally and statewide, and I think that’s favorable,” he said.

Aleardi noted the Federal Reserve raised interest rates in December for the first time in about 10 years and has advocated for a tightening rate structure, increasing rates four times a year moving forward, in order to fight against inflation.

He said there are risks in raising rates too slowly, because if the economy is not healthy enough to withstand them, inflation and the economy could “overheat.” That means prices increasing quickly, but wages not keeping up, resulting in good and services being priced out of the market.

However, Aleardi said there are also risks with raising rates too quickly. Advocates for this point of view feel weaknesses seen recently in China and other emerging markets around energy alliance could pull the United States into a recession, he said.

Other speakers at the symposium included Becky Bradley, executive director of the Lehigh Valley Planning Commission; Cindy Feinberg, co-founder and partner with Feinberg Real Estate Advisors; and Charles Everett, executive director of the Lehigh Northampton Airport Authority (LNAA).

Bradley said Forks and Lower Nazareth townships had the greatest square footage in commercial development proposed in 2015, at 1.37 million and 1.34 million square feet, respectively. They were followed by Lower Macungie Township (626,000), Allentown (527,000), and Hanover Township, Northampton County (423,000).

Bradley added that 2014 was the first year that 2014 was the first year apartment development outpaced single-family detached residential development. In terms of 2015 residential activity, she said, apartments made up 44 percent, compared to 19 percent for single-family, 14 percent for condominiums, and 11 percent for assisted living.

Feinberg said the Lehigh Valley office market remains healthy and active, with strong real estate demand pushing rents and net operating income higher. She said activity continues in both urban and suburban areas, and that collaborative work space is becoming increasingly important.

“2015 was the best year for U.S. office sales since 2007,” Feinberg said. “There are a lot of different reasons for that: net absorption numbers getting much stronger, vacancy rates decreasing, and the national markets getting stronger.”

Charles Everett discussed the Fedex Ground hub, a $335 million project originally planned for 260 acres in Allen Township, which would create 600 new permanent jobs and have the capacity to handle 30,000 packages per hour. The project had been proposed for LNAA-owned land in Allen Township, but was recently held up in the courts by a deed restriction issue.

Although that issue has been tentatively resolved, the Majestic Center in Bethlehem has recently been floated as a possible alternative site for the project. Everett said no matter which of the two sites is chosen, the project will be a great benefit for the region, and he noted that sites in New Jersey and Maryland were considered before FedEx settled on the Lehigh Valley.

“I consider this a win because no matter what happens, this development will be coming to the Lehigh Valley, which is a really great thing,” Everett said.

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