LVEDC Releases First Commercial Real Estate Report Since Coronavirus Outbreak
By Colin McEvoy on May 18, 2020
It’s a very different world since the last issue of the Lehigh Valley Commercial & Industrial Real Estate Report had been released.
The Lehigh Valley Economic Development Corporation (LVEDC) has released the latest issue of the quarterly report, which provides a detailed overview of industrial and office market activity and notable real estate transactions in the region during the first quarter of 2020.
When the previous quarter’s report was released, the Lehigh Valley economy was surging, with a gross domestic product of $41 billion and unemployment had been hovering at record lows. But the outbreak of the coronavirus and mitigation efforts have drastically changed the economic outlook not just in Lehigh Valley, but throughout the nation and the world.
However, as the new report indicates, analysts believe the Lehigh Valley industrial real estate market is well-positioned to weather the economic downturn. The region’s industrial market was strong before the disruption caused by the coronavirus, and the region’s economic fundamentals will not have not changed, and will in fact be more important than ever.
“The solid and diverse base of the Lehigh Valley economy will limit the overall impact of the quarantine and recession here,” LVEDC President & CEO Don Cunningham wrote in the report. “Some cornerstones of the economy – health care, manufacturing and production, and distribution and e-commerce – will grow in value and importance. Development in these areas has continued and demand for land and buildings remains high.”
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 has 125.7 million square feet of industrial inventory, and 6.2 million of additional space had been under construction before work on some projects was suspended due to COVID-19, according to the report.
Ben Atwood, market analyst with the commercial real estate research organization CoStar, was quoted in the report as saying owners, developers, brokers, and tenants across the country almost unanimously agree the shipping and logistics market will recover quickly from the coronavirus shutdown. He feels Lehigh Valley is well-poised to benefit from this trend.
“While Lehigh Valley does have a lot of space set to deliver, its location for shippers is ideal,” Atwood said. “It appears entirely possible that e-commerce’s growth will accelerate in the coming year, as people are essentially being forced to adapt to shopping online.”
Economic development activity has continued in the Lehigh Valley during the coronavirus pandemic, and LVEDC remains in contact with more than 30 ongoing development projects to help ensure that they remain on-track throughout the crisis.
Additionally, Pennsylvania Gov. Tom Wolf lifted a statewide shutdown on construction on May 1, and Lehigh Valley contractors were ready to resume activity. Many of the region’s major construction firms had already been continuing to work on projects deemed essential.
The Lehigh Valley office market currently includes 16.2 million square feet of inventory, excluding owner-occupied and medical office space, according to the report. No additional office space is currently under construction, and vacancy rates remained steady in Q1, but are down compared to one year ago.
The report also includes a list of the most notable commercial real estate transactions from the first quarter of 2020.
This includes the completion of Prologis’ acquisition of Liberty Property Trust, resulting in the largest single owner of industrial real estate in Lehigh Valley. Liberty is now part of a Prologis portfolio that includes 814 million square feet across 19 countries.
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