Lehigh Valley Commercial Real Estate Report Released for Q2 2021
By Colin McEvoy on August 20, 2021
The latest issue of the Lehigh Valley Commercial & Industrial Real Estate Report has been released, providing information on such topics as continued industrial and manufacturing development, office reopening plans in the region, and Lehigh Valley’s 18-34 population growth.
Each quarter the Lehigh Valley Economic Development Corporation (LVEDC) publishes a report that provides a detailed overview of industrial and office market activity and notable real estate transactions in the region. The newest edition covers data from the second quarter of 2020.
A digital version of the Lehigh Valley Commercial & Industrial Real Estate Report can be found here. Hard copies will not be printed this quarter.
The Lehigh Valley is the fastest-growing region in Pennsylvania for the population between ages 18 and 34. Lehigh County ranked No. 1 of all the state’s 67 counties in population growth among that demographic, and Northampton County ranked No. 4, according to the report.
That information comes just as the recently-released 2020 Census results have shown that Lehigh Valley’s population grew by 6.2% since 2010, making it among the fastest growing regions in the state of Pennsylvania.
Industrial and economic growth remains strong in the region, according to the LVEDC report. The organization is tracking an active pipeline of 32 companies considering a move to or expansion in the region as of the end of Q2 2021, 21 of which are manufacturing companies.
Demand for smaller-footprint industrial space remains high. Industrial buildings in the range of 20,000 SF to 80,000 SF have the lowest vacancy rate in the Lehigh Valley, but the least amount of inventory under construction, according to the report.
“The Lehigh Valley has continued to outpace the majority of the nation in industrial absorption,” said William Wolf, Executive Vice President of CBRE Advisory & Transaction Services, one of several experts quoted in the report.
“The expansion of the industrial market has been energized by the Lehigh Valley’s location, excellent labor and overall quality of life,” Wolf said. “We see these trends continuing for the foreseeable future.”
The Lehigh Valley has a total of 135 million square feet of industrial inventory as of Q2 2021, with an overall vacancy rate of 4.8%. In terms of office space, the Lehigh Valley is still the most affordable option for Class A space among nearby regions in Pennsylvania and New Jersey.
The Lehigh Valley’s direct asking rent for Class A is $23.68 per square foot, compared to $32.94 in Plymouth Meeting/Blue Bell, and $49.13 in University City in Philadelphia, according to the report.
As vaccination rates increase, Lehigh Valley employers have begun releasing guidance and policies to employees about the return to the office. Reopening plans have varied across the region, with some offices planning full or phased reopenings, and others approving hybrid schedules.
LVEDC surveyed regional companies in July about their plans to return to their offices. This report provides the information that companies like Olympus, B. Braun, ADP, and others shared with the organization. Those plans are subject to change in response to new COVID-19 developments.
“Larger employers (are) returning to the office, many of them offering hybrid work schedules for their employees,” said Cindy McDonnell Feinberg of Feinberg Real Estate Advisors said in the report. “Next up for completion of office environments is the new Air Products corporate headquarters in Upper Macungie and the construction of the first office building on the Waterfront in the city of Allentown.”
The Lehigh Valley office market currently comprises 27.7 million square feet of inventory; excluding medical or owner-occupied space, the total rentable office space is 16.9 million square feet.
This report also includes notable commercial real estate sales and leases from the second quarter of 2021. This includes the Rockefeller Group’s sale of 951 Willowbrook Road in Allen Township for $201.5 million, the largest sale price for a single industrial building.
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