Panel of Experts Discusses Lehigh Valley Office Market at LVEDC Event
By Colin McEvoy on May 14, 2015
A panel of four experts participated in a discussion about the state of the Lehigh Valley office market during a May 13 event hosted by the Lehigh Valley Economic Development Corporation’s (LVEDC) Brokers & Developers Council.
The panelists included Jessica Goffredo-Pantaleo, leasing representative with PennCap Properties; Mark Mulligan, CEO of VM Development Group; Phil Schenkel, vice president with JLL; and Andrew Twiggar, principal and co-founder of Dunn Twiggar.
Moderated by Lea Glembot, LVEDC Vice President of Economic Development and Marketing, the discussion included such topics as trends in the regional office market, major factors influencing tenant decision-making, the importance of amenities for properties, and predictions about the future of Lehigh Valley’s office market.
Below are some excerpts from the discussion, which was attended by about 80 people at the Lehigh Valley Corporate Center in Bethlehem:
What are the major trends impacting the office market that you are seeing, and how have things changed in the most recent year or two?
Goffredo-Pantaleo: I think that in the past few years we’ve seen a footprint decrease in some companies because they were getting rid of some of the private offices, and going to a more open-concept feel. And then recently, in the last year, we’ve seen companies that were holding back on their square footage needs are now growing, because I think they have felt more comfortable with the economy, but they still go with a very open concept type office feel. Maybe the executives still have private closed offices, but increasingly you’re seeing more of an open-concept office environment.
Besides costs and location, what are the other factors that influence a tenant’s decision-making process?
Mulligan: A lot of the leaders I’ve talked to in office space say tenants are looking for not just the environment in the building but in the community outside of it. In Easton, with all its restaurants and a lot of the work going on in the city, that’s really becoming the draw. Pricing is not such a factor as the amenities and the “coolness factor.” I was just at a conference there they said the third or fourth thing that millennials want to know from a company is “How much do I get paid?” The first thing they want to know at is “Do you have a corporate responsibility?”, “Are you doing great things for the environment around you?”, “What’s the reputation of your company in the marketplace?” The leaders of these companies see these trends and say, “Wow, if we want good employees, we’re going to need to get a space that makes them better employees.” That’s what I’m finding. I’m not finding price is such an issue.
The office market serves a variety of service-based industries, including financial, legal, technology, and medical, among others. Are you seeing any shifts in the industry mix you are servicing, or any particularly active segment?
Scheknel: One of the strengths of our current market is we really don’t have a single dominant player right now. If you look at the recent activities in the past six months, the big deals that have been announced and are going to be announced – St. Luke’s Health Network, Guardian Life Insurance, National Penn Bank, Norris McLaughlin moving into downtown – it’s a real mix of players and it’s coming from all over the place. It’s a really broad brush of users and industries and I think that’s one of the true strengths that we have here.
Barring any major catastrophe or economic downtown, can you give us any predictions on the state of the Lehigh Valley office market in the coming years?
Twiggar: I think it’s probably going to look very similar to what it looks like now. I don’t foresee anything drastically changing, even with the product that is coming online and the continue resurgence of all the downtowns and all of the boroughs. It’s providing more opportunities and ideally we’re going to see some good growth, both from our home-grown companies and other folks moving into the industry. I don’t really see a drastic change coming.
How important are amenities such as on-site food services, banking and fitness facilities?
Scheknel: One amenity it seems people always say they want is a fitness center. But then when I’m showing a building, I’ll walk through it and find there’s nobody ever using the fitness center. They have to have one, but nobody’s ever there! (audience laughs) But honestly, all kidding aside, as far as landlords are concerned, the absolute best amenity they can offer a tenant is good, reliable property management services. Being able to take care of the tenants, be there at their beck and call, be responsive and keep them happy: that’s the best thing a tenant can ask for.
This event is made possible by the generous support of our presenting sponsor, PennCap Properties.
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