Less Than 5% of Lehigh Valley Industrial Buildings Exceed 300,000 Square-Feet
By Colin McEvoy on August 28, 2018
While much public focus on commercial real estate development in the Lehigh Valley has been on large industrial buildings, only 4.8 percent of the region’s industrial buildings are larger than 300,000 square-feet.
Out of 1,838 industrial buildings in the region, only 89 buildings are larger than that size, according to the latest issue of the Lehigh Valley Commercial and Industrial Real Estate Report, a quarterly publication by the Lehigh Valley Economic Development Corporation (LVEDC).
Only three industrial buildings larger than 300,000 have been added in the region so far in 2018, and only four were added in 2017. Industrial buildings over 300,000 square-feet in the Lehigh Valley have a real estate tax revenue potential of $46 million, according to the report.
The Lehigh Valley Commercial and Industrial Real Estate Report provides economic data on the region’s office and industrial markets. The new issue, released this month, covers data from the second quarter of 2018.
“We are fortunate the Lehigh Valley has seen tremendous growth in industrial development,” LVEDC President Don Cunningham said in the report, noting that a large portion of this growth has been driven by the growth of direct-to-consumer retail or e-commerce in the form of fulfillment centers and logistics and distribution operations.
“These centers are generically referred to as warehouses,” Cunningham said. “In reality, there are very few true warehouses – where inventory is merely stored – in the Lehigh Valley. The new large industrial buildings are beehives of employment where goods are moved quickly in and out direct to consumers, stores or businesses. They are providing more than 30,000 jobs today most of which with have a starting minimum wage of $15 per hour.”
The Lehigh Valley’s industrial market now exceeds 120 million square feet as of the second quarter of 2018, according to the report. The region has seen 2.57 million square feet in deliveries to the industrial market so far, and another 3.44 million square feet are currently under construction. Overall industrial vacancy rates in the region held steady at 6.5 percent.
“The Lehigh Valley continues to be one of the most desirable Industrial real estate locations in the U.S. for institutional capital and corporate tenants alike,” Gerard Blinebury, Executive Managing Director, Brokerage Services at Cushman & Wakefield, said in the report. “Tenant demand remains strong as evidenced by over 4 million square feet of year-to-date leasing activity.”
The report also focused on the office market of the Lehigh Valley, which has also continued to show growth, having reached 26.8 million square feet as of Q2 2018. There have been 281,250 square feet of office market deliveries in 2018 so far, and another 295,000 are currently under construction, according to the report.
The majority of new office space construction in the Lehigh Valley is taking place in the region’s urban centers. Ninety-six percent of the office buildings constructed in 2018 so far have been built in either Allentown, Bethlehem, or Easton, and all of the 295,000 square feet of office space currently under construction are in the cities.
“Allentown’s NIZ continues to fuel construction and leasing activity in the Lehigh Valley, especially as overall Class A office conditions remain relatively tight,” Lauren Gilchrist, Senior Vice President, Senior Director of Research for Philadelphia at JLL,” said in the report. “We expect the market to remain landlord favorable for high quality, well-located assets, especially as economic expansion continues nationally and the industrial and logistics market focuses the national spotlight on the region.”
The Lehigh Valley’s unemployment rate as of May 2018 has dropped to 3.9 percent, compared to 5.0 percent a year earlier, according to the report. That is roughly consistent with the national unemployment rate of 3.8 percent, and lower than the Pennsylvania rate of 4.5 percent.
The report also includes a table with recent notable commercial real estate sales and leases.
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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