The Lehigh Valley saw a 10 percent jump in prime logistics rents over the past year, according to CBRE. Only Seattle had a higher rate of growth, at 16.9 percent. (image courtesy CBRE)

The Lehigh Valley market has ranked second globally for growth in prime industrial and logistics rents, another sign that the region is one of the fastest growing industrial markets in the country.

The Lehigh Valley saw a 10 percent jump in prime logistics rents over the past year, according to a new study by the CBRE. That’s the second-highest annual percentage change in the world, falling behind only Seattle at 16.9 percent, according to the study.

“Living here in the Lehigh Valley, it’s easy to forget that this region is one of the fastest growing industrial markets in the country,” said Don Cunningham, President and CEO of the Lehigh Valley Economic Development Corporation (LVEDC). “It’s growing faster than the inland empires in Texas and California, and is the most desirable market in the Northeast.”

The Lehigh Valley benefits from strong demand due in part to its close proximity to major population centers, such as New York City and Philadelphia, according to David Egan, CBRE Global Head of Industrial & Logistics Research.

“Prime logistics rents across the globe continue to increase not only because of healthy economies in various regions, but also because the growth of e-commerce has created a structural shift in the marketplace,” Egan said. “E-commerce now is a permanent factor in the market, and that additional, solid demand for top-quality distribution centers will keep prime rents rising as long as new supply continues to lag.”

The Lehigh Valley’s industrial market grew by nearly 7 percent in 2016, for a total inventory of more than 113.6 million square-feet, according to LVEDC. The region has seen 1.8 million square-feet of deliveries in 2017 so far, bringing the total inventory to 115.5 million, with an additional 5 million square-feet currently under construction.

E-commerce is driving a great deal of industrial growth in the Lehigh Valley, with 26,000 employees in that regional sector. But Cunningham also notes the emergence of the Lehigh Valley as an industrial hub is a big reason why manufacturing once again became the region’s top economic sector last year.

“Manufacturing is the largest part of our economic output, making up $5.6 billion of our $37 billion GDP,” Cunningham said. “We have 680 manufacturers in the Lehigh Valley, employing 32,000 people. Companies have come to see that a good place to move product from is also a good place to make products.”

A map showing the 10 fastest growing industrial markets in the world, including the Lehigh Valley.

Behind Seattle and the Lehigh Valley, according to CBRE, the fastest-growing industrial markets in the world include Leeds/Sheffield (9.5 percent), Oakland (9.4 percent), Manchester/Liverpool (9.3 percent), Los Angeles/Orange County (9.2 percent), Atlanta (9.2 percent), Suzhou (8.7 percent), Hangzhou (7.4 percent), and Ningbo (7.2 percent).

CBRE defines prime logistics rents as the highest achievable rent for industrial distribution space of the highest quality and specification, and in the best location within each industrial market.

Overall rents for prime logistics space in global hub markets increased 2.2 percent in Q1 2017 amid continued demand, compared to 2.8 percent growth from the initial survey in 2016, according to CBRE. Out of 70 global hubs tracked by CBRE, 42 recorded an annual increase in prime rents, 15 had decreases, and 13 remained flat.

U.S. industrial hubs posted the strongest growth in prime logistics rents for the past year, according to CBRE, and Asian markets remained the world’s most expensive as demand for top-quality warehouses and distribution centers continued to outpace supply globally.

CBRE is the world’s largest commercial real estate services and investment firm. The company has more than 75,000 employees, and serves real estate investors and occupiers through approximately 450 offices worldwide.