New Lehigh Valley Report Includes Data about Qualified Opportunity Zones
By Colin McEvoy on June 4, 2019
The Lehigh Valley is uniquely poised to benefit from the recently established Qualified Opportunity Zone (QOZ) federal tax incentives, as described in the latest issue of the Lehigh Valley Commercial and Industrial Real Estate Report.
QOZs, created as a result of the federal tax overhaul legislation in December 2017, seeks to encourage investment in areas of need of revitalization. The zones forgive capital gains on commercial or residential projects in designated areas under certain conditions, promoting and incentivizing long-term investment in low-income communities.
There are more than 8,700 QOZ acres and more than 2,900 QOZ tax parcels located in the Lehigh Valley’s cities of Allentown, Bethlehem, and Easton, with 58.8 million square feet of existing industrial and office space and 22,600 multi-family units within the region’s zones.
That data, along with maps of the region’s QOZs, is just some of the information available in the latest Lehigh Valley Commercial and Industrial Real Estate Report, a quarterly publication providing economic data about the region’s office and industrial markets. The new issue, released this week, covers data from the first quarter of 2019.
A digital version can be downloaded here, and hard copies of the eight-page report are available upon request.
“The Qualified Opportunity Zones are a great new tool to attract capital into the cities of the Lehigh Valley,” Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation (LVEDC), which publishes the report each quarter.
“The fact that these zones can be layered with other incentives already available like the Allentown NIZ or the Bethlehem CRIZ provide Lehigh Valley that much more of an advantage,” Cunningham said. “QOZs offer new opportunities to investors who have long known about this region and sought a chance to get in. We will work to ensure that the region is able to maximize the potential of this new investment incentive.”
LVEDC has been working to publicize the region’s QOZs and maximize the potential of this new investment incentive. In April, the organization released informative materials about the zones and how developers can take advantage of them.
The new report also includes information about the Lehigh Valley’s industrial market, which has seen 258,200 square feet of deliveries so far in 2019, with another 5.2 million square feet currently under construction.
“The Lehigh Valley core industrial market continues to thrive despite increased development in the secondary and tertiary markets,” said Justin Fanslau, Director of Leasing with Liberty Property Trust, one of several experts quoted in the report. The Valley’s infrastructure and access to labor make it the prime choice for companies looking to service the greater northeast.”
The overall regional industrial market includes 121.7 million square feet of total inventory, according to the report. Of the 13 industrial buildings currently under construction in the region, five are larger than 500,000 square feet in size, while six are smaller than 300,000 square feet.
There are currently 295,000 square feet of regional office space under construction in the Lehigh Valley’s office market, all of which come from Five City Center, the newest building by City Center Allentown. The total combined office market vacancy rate in Lehigh Valley is 7 percent, and the average asking rent is $14.90 per square foot.
Overall rents for office space have increased 4 percent in the past year. Class A office space asking rents are at $18.32 per square foot as of Q1 2019, a 4.4 percent year-over-year increase, according to the report.
“The urban core areas are continuing their resurgence, as evident by ADP’s imminent occupancy of 243,000 square feet in downtown Allentown,” Ryan Dietrick, Senior Vice President with Colliers International Allentown, said in the report.
“However, the suburban markets are still in play for major tenants, as evident by Air Products’ commitment to build a 525,000 square-foot headquarters and First Commonwealth Federal Credit Union’s 80,000 square-foot headquarters, both in Lower Macungie,” Dietrick said.
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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