New Lehigh Valley Report Highlights Economic Growth, Shortage of Small-Footprint Manufacturing Space
By Colin McEvoy on November 2, 2017
The latest issue of the Lehigh Valley Commercial Real Estate Report has been released, highlighting the region’s industrial growth, record-high gross domestic product, and shortage of smaller-footprint manufacturing and flex space.
The Lehigh Valley industrial market has reached 115.8 million square-feet, with another 6 million square-feet currently under construction, according to report. But none of the industrial inventory currently under construction is for small-footprint manufacturing space.
The total available space for small-footprint industrial buildings in the 40,000 to 80,000 square-foot range has changed very little in the last five years, according to the report, growing from 13.2 million in Q3 2012 to 13.4 million in Q3 2017.
Three industrial buildings were delivered in Q3 2017, and only one was smaller than 80,000 square-feet, according to the report. None are currently under construction.
The report is a quarterly publication released by the Lehigh Valley Economic Development Corporation (LVEDC) that provides economic data on the region’s office and industrial markets. The newly-released issue covers data from the third quarter of 2017.
Hard copies are available upon requests, and was also distributed at the LVEDC Broker & Developer Council event on Nov. 2, which is specifically focused on the shortage of industrial manufacturing and flex space. The report is also available online, as is a metric version.
The report notes that the Lehigh Valley GDP has reached an all-time high of $39.1 billion for 2016, a more than 4 percent increase over the previous year. The region saw year-over-year growth in each individual subsector, reflecting the remarkable balance of the Lehigh Valley economy.
“The Lehigh Valley is now the 65th largest economy in the United States, which is a jump of eight places from 73rd last year,” Don Cunningham, LVEDC President and CEO, said in the report. “Our region has more annual economic output than the states of Vermont and Wyoming, as well as 108 other countries in the world.”
Finance, insurance, and real estate is once again the region’s largest sectors in terms of GDP, having reached $8 billion, or roughly 20 percent of the total economy. Manufacturing saw significant growth as well, reaching $6.9 billion, while transportation and warehousing is the fastest growing sector, reaching $1.9 billion, a 9.5 percent year-over-year increase.
The Lehigh Valley Commercial Real Estate Report includes perspectives from regional experts, including Joe Correia, Executive Vice President of J.G. Petrucci Co., Inc. He said demand for Class A industrial product in the Lehigh Valley is very strong, as is demand for immediate turnkey delivery of flexible industrial properties.
“To keep up with the demand, our firm currently has over 500,000 square feet of speculative buildings that will be delivered to the market in 2017,” Correia said. “As the manufacturing, distribution, and e-commerce industries continue to evolve, we believe our flexible speculative designs will translate into efficient and timely delivery of user fit-out requirements, which will support their efforts to accelerate growth opportunities in the Lehigh Valley and surrounding metropolitan markets.”
The Lehigh Valley office market inventory has reached 26 million, with 269,300 square feet currently under construction, and 105,800 square feet in year-to-date deliveries in 2017, according to the report. The office vacancy rate fell from 7.7 percent in Q2 2017 to 6.7 percent in Q3.
Del Markward, President and CEO of the Markward Group, says in the report that, while the Lehigh Valley’s e-commerce and distribution markets have received the lion’s share of publicity and job creation, the regional office market has likewise seen a steady, albeit slower, upward trend.
“The downtown Allentown office component has led the way in new product and provided significant activity while the suburban and surrounding office product works to full up its vacancies left by the burgeoning city market,” Markward said. “This reverses the trend in the Valley seen over the prior 40 years of office location by major employers and we expect the users to steadily backfill the surrounding regional space.”
The data featured in the Lehigh Valley Commercial Real Estate Report was gathered by George Lewis, LVEDC Director of Research. To obtain copies, contact Director of Communications Colin McEvoy at [email protected] or 610-266-3817.
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