Lehigh Valley Office Market Sees 670,000 SF Under Construction in Q1 2018
By Colin McEvoy on May 15, 2018
Nearly 670,000 square feet of office space was under construction in the Lehigh Valley as of the first quarter of 2018, and the total office market inventory for the region currently stands at 26.5 million square feet.
Those were among the findings in the latest issue of the Lehigh Valley Commercial and Industrial Real Estate Report, a quarterly publication by the Lehigh Valley Economic Development Corporation (LVEDC) that provides economic data on the region’s office and industrial markets.
“We’re seeing some significant office market growth in the pipeline, and the downtowns across the Lehigh Valley continue to experience a renaissance,” said Don Cunningham, LVEDC President & CEO. “They are driving the birth of a New Lehigh Valley. A Lehigh Valley that can grow as the home of corporate offices, knowledge workers, technology-based industries, and entrepreneurship.”
The newly-released issue covers data from the first quarter of 2018. During that quarter, a total of 669,832 square feet of office space was under construction. That includes Tower 6, the 12-story, 180-foot Class A office and retail building unveiled by the City Center Investment Group earlier this month.
Jarrett Laubach, City Center Director of Leasing, is one of several regional experts who provide their perspectives on the regional industrial and office markets in the report. Laubach said City Center has had recent success in attracting leading companies to the region with airy spaces featuring floor-to-ceiling glass that are also technologically advanced.
“When such space is built in a vibrant live-work community, companies take notice,” Laubach said. “Today’s tenants, whether they’re large publicly traded companies, mid-size tech companies or small professional services firms, seek a compelling set of economics, but they also value amenities, efficiencies and a collaborative environment.”
The Lehigh Valley office market has seen a total of 11,418 square feet in year-to-date deliveries as of the first quarter of 2017. Lehigh Valley office rents have decreased, both over the past quarter and year-over-year.
The report also provides an overview of the Lehigh Valley’s industrial market, which continues to grow and is poised to top 120 million square feet in 2018.
The regional industrial market has reached a total inventory of 119.5 million square feet as of the first quarter of 2018, with 1.1 million square feet in deliveries so far this year, and another 3.6 million square feet under construction.
The Lehigh Valley continues to experience a shortage of small-footprint industrial buildings in the 40,000 to 80,000 square foot range, according to the report. More than 55 percent of the 13.2 million square feet of inventory within this range was built prior to 1980, and of the 111 buildings constructed after that time, 94 are 100 percent occupied.
Michael Alderman, Vice President, Marketing Officer at Liberty Property Trust, discussed the regional industrial market in the report. He said 2018 has begun with encouraging leasing activity, and that the core market area’s vacancy rate should be sufficient to satisfy a number of prospective tenants in the market.
“A dearth of smaller industrial spaces is being addressed by the construction of a handful of buildings in infill locations,” Alderman said. “Market participants have generally optimistic long-term projections as the manufacturing cluster appears to be growing while retail supply chains continue to evolve in response to ecommerce and new customer expectations.”
The Lehigh Valley has added more than 24,000 jobs in the last five years, according to the report. The region’s unemployment rate as of February 2018 is 4.9 percent, which is roughly consistent with the state of Pennsylvania and slightly higher than the national rate.
The Lehigh Valley is the 65th largest economy in the United States, according to the report, with an economic output of $39.1 billion that is larger than the states of Wyoming ($38.5 billion) and Vermont ($31.5 billion), as well as 108 other countries in the world.
The report also includes a table with recent notable commercial real estate sales and leases, including Liberty Property Trust’s $249 million sale of warehousing space at 700 Uline Way in Upper Macungie Township.
The data featured in the Lehigh Valley Commercial Real Estate Report was gathered by George Lewis, LVEDC Director of Research and Analysis. To obtain hard copies, contact Director of Communications Colin McEvoy at [email protected] or 610-266-3817.
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