Report: Lehigh Valley Industrial Market Continues Steady Rate of Growth
By Colin McEvoy on May 30, 2017
The Lehigh Valley industrial market continues its steady rate of growth, reaching a total inventory of 113.8 million square-feet as of the first quarter of 2017.
That is one of the findings from the most recent issue of the Lehigh Valley Commercial Real Estate Report, a quarterly publication about the real estate climate in the Lehigh Valley, with a particular focus on the region’s office and industrial markets.
The most recent issue, which covers data from the first quarter of 2017, can be downloaded here. A metric version can be downloaded here. The report is released each quarter by the by the Lehigh Valley Economic Development Corporation (LVEDC).
The Lehigh Valley saw 320,208 square-feet of deliveries to the industrial market over the first quarter of the year, according to the new report. About 6.1 million square-feet are currently under construction in the region, which is the equivalent of 5.36 percent of the current industrial market.
Regional industrial vacancy rates have dropped to 4 percent, down from 5.7 percent in the fourth quarter of 2016, and from 6.7 percent in the first quarter of 2016. Asking rates per square-foot are currently averaging $5.35, roughly the same as the $4.84 rate in Q1 2016.
“The Lehigh Valley remains well positioned within the Northeast U.S. industrial market for continued growth of manufacturing, distribution and now flex industrial,” said Gerry Blinebury, Executive Director of Cushman & Wakefield, one of several experts quoted in the report.
“The capital markets have historically been more focused on bulk distribution, but have now demonstrated an interest in flex industrial as evidenced by recent transaction activity,” Blinebury said. “This dynamic is expected to drive additional development of flex industrial which is well timed as we are seeing an increase in demand for this product type.”
The Lehigh Valley’s office market remains at 25.6 million square-feet, having seen no new deliveries in the first quarter of 2017, according to the report. A total of 314,565 square-feet are currently under construction in the Lehigh Valley office market.
For comparison purposes, the region saw 356,338 square-feet in total office market deliveries in 2016, according to the report. Vacancy rates have remained largely steady throughout the year, currently coming in at 8.8 percent, compared to 9.5 percent in the first quarter of 2016.
“The Lehigh Valley office market has seen robust activity throughout the first quarter of 2017 comprised of both Lehigh Valley companies expanding as well as new tenants touring and entering the market,” Jessica Goffredo-Pantaleo, Leasing Director with PennCap Properties, said in the report.
“With the addition of a few blocks of Class B space to the inventory, landlords could see an increase in concessions as negotiations are transacted in that market segment,” she said. “The lack of significant vacancy in the suburban ‘trophy’ category will continue to trend until evelopment commences on projects currently in the pipeline.”
The report also highlights major Q1 2017 commercial real estate transactions, including notable sales and leases.
Among the most noteworthy commercial real estate transactions of the quarter was Kraft Heniz Co.’s sale of its Upper Macungie Township facility at 7532 Industrial Blvd. The property was sold for $36.5 billion to Ridgeline Property Group of Atlanta, which has publicly announced plans to build two 730,080 square-foot warehouses on the property.
Additionally, this quarter marked the $35.7 billion sale of 2320 Newlins Mill Road of the Majestic Athletic facility at 2320 Newlins Mill Road in Palmer Township to G&I IX Newlins Mill LLC. V.F. Corp has announced it is selling its Licensed Sports Group business (which includes Majestic Athletics) to Fanatics Inc., which will continue manufacturing on-field uniforms for Major League Baseball players in the Palmer Township facility.
The Lehigh Valley Commerical Real Estate Report also includes such information as net absorption, average asking prices, year-over-year rent growth, and current economic data such as employment by industry, growth rates, historical unemployment data, and workforce growth.
It notes that the Lehigh Valley’s unemployment rate has decreased to 4.8 percent as of March 2017 (compared to 5.6 percent six months earlier) and is roughly on par with the average unemployment rates in Pennsylvania (4.7 percent) and the United States (4.5 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] or 610-266-3817.
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