Lehigh Valley Development Symposium Speaker Describes ‘Synchronous Global Expansion’
By Colin McEvoy on May 16, 2018
For the first time in many decades, more than 90 percent of the countries around the world are in a global expansion, according the keynote speaker at the 2018 Lehigh Valley Business Real Estate & Development Symposium.
Keith Aleardi, Chief Investment Officer with Fulton Financial Advisors and President & CIO of Clermont Wealth Strategies, predicted the national gross domestic product will grow 2.9 percent in the next year, and possibly exceed 3 percent growth for the first time in years.
“We are in a synchronous global expansion,” Aleardi said at the symposium, which was held May 15 at DeSales University in Upper Saucon Township. “Leading indicators show really strong output growth, unemployment is at record lows, and even the participation rate, which has really come down since 2008-09, is starting to plateau.”
More than 500 people attended the symposium, for which the Lehigh Valley Economic Development Corporation (LVEDC) was a major sponsor.
Aleardi said there has been lackluster capital spending since the recession started, with businesses accumulating cash, but not wanting to spend it on properties and construction. He believes that is starting to lift, and that the economy will be stronger as a result.
“I think we can be very confident that we will see growth for the remainder of this year into 2019,” he said. “If you’re looking to handicap my forecast on when we might see our first recession in 10 years, I think it’s about mid-2020 or so, and I think it will be slight, just a small amount of negative growth.”
What’s Hot and What’s Not
The event included a panel discussion about Lehigh Valley development with Joseph Fitzpatrick Jr., founder of Fitzpatrick Lentz & Bubba; Becky Bradley, Executive Director of the Lehigh Valley Planning Commission; Michael Alderman, VP, Market Officer, Pennsylvania for Liberty Property Trust; and J.B. Reilly, President of City Center Investment Corporation.
It also featured a panel discussion about “What’s Hot and What’s Not” in commercial, industrial, office, and residential real estate markets, featuring Peter Polt, Executive Vice President of J.G. Petrucci Co., and Doug Frederick, owner of The Frederick Group.
Alderman cited the recent Lehigh Valley Commercial Real Estate Report released by LVEDC, which highlights a shortage of small-footprint industrial space for manufacturers in the 40,000 to 80,000 square-foot range. Out of 111 such buildings constructed since 1980, 94 are 100 percent occupied, and none are currently under construction, according to the report.
“This needs to be addressed,” Alderman said. “There is a void which is arguably a limit to our economic growth locally.”
Bradley said out of all the subdivision and development plans in the Lehigh Valley in 2017, 32.3 percent were non-residential, 27 percent were residential, and 40.7 percent were non-residential. Normally, non-residential exceeds 60 percent of such plans.
“What this tells us is there is a lot of desire and demand for construction, whether its residential or non-residential,” said Bradley, who notes that these plans were spread throughout the municipalities across the Lehigh Valley. Out of 427 plans, 221 were in Lehigh County, and 206 were in Northampton County.
Out of all approved residential development in the Lehigh Valley in 2017, 38 percent were apartments, 33 percent were single-family, and 16 percent were townhouses. The prior two years there was significant apartment development, she said, with about 79,000 new apartments added in the Lehigh Valley since 2012.
Millennials Driving Business Preferences
Reilly said millennials will make up 50 percent of the workforce by 2020, and that the demographic prefers to live in cities, with 62 percent saying they want to live in mixed-use urban communities close to shops, restaurants and offices.
“I don’t care what business you’re in – real estate, hospitality, healthcare, retail – millennial preferences are driving your businesses,” he said. “Fifteen to 20 years ago, our cities were considered an area of weakness. What I think is emerging now is that our cities are a point of strength in the Lehigh Valley, and that’s going to continue as we look ahead.”
Reilly also said the way people work has also changed, with employees now craving collaborative workspaces with open floor plans. In the mid-1990s, employers utilizing 3.5 to 4 employees per thousand square feet, but today it is 5 to 7 employees per thousand.
Reilly also stressed the importance of new federal legislation creating Qualified Opportunity Zones, a new tool for promoting and incentivizing long-term investment in low-income communities, which includes 14 proposed census tracts in the Lehigh Valley.
“I think it’s going to really create some very significant incentives for the three urban areas in the Lehigh Valley,” he said.
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