The final issue Lehigh Valley Commercial Real Estate Report for 2017 provides a year-end outlook of the real estate climate of the Lehigh Valley, while also once again highlighting the shortage of smaller-footprint manufacturing and flex space in the region.

Each quarter, the Lehigh Valley Economic Development Corporation (LVEDC) publishes a report that provides economic data on the region’s office, industrial, and flex markets, highlighting total inventory, deliveries, ongoing construction, and other data.

The Q4 2017 report was included as a four-page addendum within the LVEDC 2017 Annual Report, which was released for the first time at the organization’s annual meeting earlier this month, and is also newly available in digital format on the LVEDC website.

The standalone four-page Commercial Real Estate Report addendum for Q4 2017 can be downloaded in PDF form here.

The Lehigh Valley industrial market has reached 116.4 million square feet, with another nine projects currently under construction representing an additional 5.5 million square feet, according to the report. Total industrial building inventory grew by 1.7 percent in 2017.

The region has added nearly 20 million square feet of industrial and flex building space in the last five years, according to the report. Fifty percent of the region’s industrial buildings are manufacturing; 27 percent are warehousing, 19 percent are distribution, and 4 percent are flex.

“We have become a jobs center for a large area with 92,000 workers a day travelling into the Lehigh Valley from Berks, Schuylkill, Carbon, Monroe, Bucks and Montgomery counties,” LVEDC President & CEO Don Cunningham said in his featured remarks at the annual meeting.

As LVEDC officials have previously stressed, the report shows that small-footprint buildings suitable for manufacturers remain a significant need in the Lehigh Valley, with few having been built in recent years.

The Lehigh Valley’s total inventory of industrial buildings within the 40,000 to 80,000 square-foot range came in at 13.3 million square feet in 2017, which is little changed from 13.1 million in 2013, according to the report.

Building occupancy in that inventory is at 96 percent, and with available buildings almost fully occupied, average rent has increased by 23 percent in the last five years, according to the report.

In the Lehigh Valley office market, total inventory has reached 26.3 million square feet, with another 288,000 square feet currently under construction. Overall office vacancy decreased from 9.5 percent to 7.7 percent in 2017.

Class A office space vacancy dropped from 15.4 percent to 10.1 percent in 2017. Even with the addition of more than 900,000 square feet of Class A office space in the last five years, the vacancy rate in that period has decreased from 17 percent to 10 percent over that span of time.

The Lehigh Valley’s average asking rent for Class A office space is significantly lower than that of other major regions and cities. The rate is $18.60 per square foot in the Lehigh Valley, compared to $31.72 in Philadelphia, $32.02 in Charlotte, $60.16 in Washington, D.C., and $75.08 in New York City.

The data featured in the Lehigh Valley Commercial Real Estate Report was gathered by George Lewis, LVEDC Director of Research. To obtain copies of the annual report, contact Director of Communications Colin McEvoy at cmcevoy@lehighvalley.org or 610-266-3817.