Sample pages from the new Q3 2020 issue of the Lehigh Valley Commercial & Industrial Real Estate Report.

Like the rest of the nation and world, the Lehigh Valley economy took a hit during the coronavirus pandemic. But the region has already begun to show signs of recovery, and the industrial market in particular has fared much better than other regions, according to a new report by the Lehigh Valley Economic Development Corporation (LVEDC).

Due to the COVID-19 crisis, employment in the Lehigh Valley dropped faster and sharper than it did during the Great Recession. But nearly half the jobs lost this spring have already recovered, according to the latest issue of the Lehigh Valley Commercial & Industrial Real Estate Report.

The cover of the new edition of the Lehigh Valley Commercial & Industrial Real Estate Report.

Released quarterly, the report provides a detailed overview of industrial and office market activity in the region, as well as significant commercial real estate transactions. The new issue covers data from the third quarter of 2020.

A digital version of the Lehigh Valley Commercial & Industrial Real Estate Report can be downloaded here. Hard copies will not be printed this quarter.

In the report, LVEDC President & CEO Don Cunningham noted that the pandemic has certainly impacted the Lehigh Valley economy, but that not all industrial sectors have been impacted equally.

“Restaurants and hospitality businesses are shuttered while online retailers and manufacturers based here are experiencing record growth and new ones are coming,” Cunningham said. “The stock market keeps rising and residential home sales are on such a torrid pace that basic houses in the Lehigh Valley sell in 2 days at 20% above asking price with dozens of offers.”

Total employment in the region dropped from 384,800 in January 2020 to a low of 322,100 in April, according to the report. But by September, the most recent month for which figures are available, the total had risen to 356,900.

Likewise, the Lehigh Valley unemployment rate reached a historic high of 16.6% in April, but has since dropped to 8% as of September, according to the report. That number is consistent with both Pennsylvania and U.S. averages.

The Lehigh Valley has also ranked in the Top 5 markets for industrial space under construction as a percentage of total industrial space (about 6%) in the third quarter of 2020. It is the only Northeast market to make the Top 20.

There are currently 35 active industrial projects in the pipeline, according to the report. These projects could result in $1.3 billion in investment and the creation of 4,400 potential jobs.

“Despite the pandemic, and unlike the office and retail markets, we continue to see strong demand for industrial space in Lehigh Valley, especially with e-commerce, logistic, and manufacturing organizations,” said Joseph Correia, Project Executive at J.G. Petrucci Company Inc., one of several experts quoted in the report.

The regional industrial market currently encompasses 128.8 million square feet of inventory, with 2.5 million square feet having been added in 2020 alone, despite the pandemic. Total industrial space in the region has grown by more than 30 million square feet in the past decade.

The overall industrial vacancy rate is 5.8%, according to the report. For smaller industrial buildings in the range of 80,000 square feet or less, the vacancy rate is even lower at 3.1%.

The Lehigh Valley office market, excluding medical and owner-occupied office space, is 27.2 million square feet. The vacancy rate for leased space has increased to 10.9%, and the average asking rent has increased 2.8% in the last 12 months, according to the report.

The average rent for office space in Lehigh Valley is significantly lower than other major metropolitan areas in the Northeast, coming in at $22.32 per square foot for Class A space. That’s compared to $86.69 in New York City, $35.47 in Philadelphia, and $32.91 in North Jersey.

Jarrett Laubach, Director of Leasing at City Center Investment Corporation, discussed the office market and luxury apartments in downtown Allentown in the report.

“Five years ago, skeptics said no one would move to downtown Allentown,” Laubach said. “But City Center has built more than 800 apartments since 2016 and has 600 more in planning and development.”