New LVEDC Report Shows Continued Growth of Lehigh Valley Industrial Market
By Colin McEvoy on September 7, 2017
The Lehigh Valley industrial market continues to grow, reaching a total inventory of 115.5 million square-feet as of the second quarter of 2017.
That’s according to the latest issue of the Lehigh Valley Commercial Real Estate Report, 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 Lehigh Valley has seen 1.8 million square-feet in industrial deliveries so far this year, and 5 million square-feet are currently under construction, according to the report. The region’s overall industrial vacancy rates are 5 percent, and for properties specifically between 40,000 and 80,000 square-feet, the vacancy rate is 3.6 percent.
“The Lehigh Valley and the I-78/I-81 Corridor continue to be one of the most dynamic warehouse development hot spots in the nation,” Sean Bleiler, Senior Vice President at CBRE, said in the report. “Speculative construction continues to drive institutional investment and user demand.”
The release of LVEDC’s new report follows with the recent CBRE announcement that the Lehigh Valley’s year-over-year industrial rent growth (10.1 percent) is the second highest in the world, behind only the Seattle area (16.9 percent).
The region’s consistently increasing asking rates reflect a growing demand for industrial properties, and although the e-commerce sector tends to generate the most attention, the LVEDC report indicates the need for smaller industrial properties is also significant.
The Lehigh Valley office market has grown to 25.8 million square-feet, according to the report, with 57,565 square-feet in year-to-date deliveries as of the second quarter of 2017.
Office inventory in the Lehigh Valley has grown by an average of more than 300,000 square-feet annually over the last three years. A total of 364,538 square-feet are currently under construction.
The report commentary from Kelly Berfield, Senior Vice President at Colliers International, who says that the open office design plan continues to be one of the hottest trends in commercial office space, aimed at a collaborative environment with a modern feel.
“With a focus on productivity and employee retention, many companies are offering amenities like fitness centers, onsite cafés, media centers and – in some cases – charging stations for electronic vehicles,” Berfield said. “Regardless of the size of the tenants, landlords will continue to be faced with the decision to invest in modern office space if they want to remain competitive in the market and attract quality tenants from both inside and outside the Lehigh Valley.”
The region’s office vacancy rate is at 7.7 percent. Office inventory has increased by 3.3 percent in the last three years, and total vacancy in the sector has decreased 11 percent in the last 12 months. A total of 862,000 square-feet of Class A office space has been added since 2014, and Class A asking rents have increased as the vacancy rate has dropped.
The Lehigh Valley Commercial Real Estate Report also highlights major Q2 2017 commercial real estate transactions, including notable sales and leases, as well as such information as net absorption rates, average asking prices, top industrial sectors, and fastest growing employment sectors.
It also notes that the Lehigh Valley’s unemployment rate has reached 5.2 percent as of June 2017. That is slightly higher than the national average of 4.3 percent, but roughly on par with the Pennsylvania average of 5.0 percent.
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]hvalley.org or 610-266-3817.
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