Sample pages from the Q3 2019 issue of the Lehigh Valley Commercial & Industrial Real Estate Report.

The latest issue of the Lehigh Valley Commercial & Industrial Real Estate Report is out, highlighting some of the recent activity that has continued to demonstrate the Lehigh Valley is an in-demand market for industrial development and manufacturing space.

The new report, which covers data from the third quarter of 2019, provides a detailed overview of industrial and office market activity in the region, as well as significant commercial real estate transactions, such as the recently-announced agreement for Prologis to acquire Liberty Property Trust.

Although that merger agreement was announced in the fourth quarter, the report highlights the significance of the planned $12.6 transaction. Prologis owns 8.1 million square feet of industrial space in the Lehigh Valley and announced in July an agreement to acquire the assets of Black Creek Group, which include 2.6 million square feet in the region.

The cover of the new Lehigh Valley Commercial & Industrial Real Estate Report, which is available digitally.

With the announced agreement to acquire Liberty’s 17.5 million square feet, Prologis would own more industrial space than any other company in the market, according to Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation (LVEDC).

“Liberty has long been the largest owner of industrial real estate in the region and Prologis has had a large presence here as well,” Cunningham said in the report. “The combined companies will become an even more significant entity in our market. The purchase shows the strategic importance of the Lehigh Valley in the industrial and manufacturing sectors.”

The Lehigh Valley Commercial & Industrial Real Estate Report was published by LVEDC. A digital version can be downloaded here, and hard copies of the eight-page report are available upon request. A metric version is also available digitally.

The Lehigh Valley industrial market has grown to 124 million square feet as of the third quarter of 2019, with a vacancy rate of 5.1%, according to the report. Developers have delivered nearly 2 million square feet of space through the first three quarters of the year, with another 6.44 million square feet currently under construction.

The overall average asking rent for industrial space in the Lehigh Valley is $5.52 per square foot as of Q3 2019. The average asking rent for buildings over 300,000 square feet is 4.7%, and is 4.2% for buildings under 150,000 square feet.

“From an industrial standpoint, we continue to see high demand from both users and institutional capital,” said Sean Bleiler, Senior Vice President with CBRE, one of several regional experts quoted in the report.

“The Lehigh Valley is well positioned to capitalize on the ever-changing supply chain landscape as user strategies are adjusting to facilitate consumer demand,” Bleiler said. “Large users and institutional landlords alike see the Lehigh Valley and Eastern PA as a top-tier global market.”

On the office side, the Lehigh Valley office market currently includes 27.37 million square feet, with another 629,000 square feet currently under construction, according to the report.

Excluding owner-occupied and medical office space, the regional office market encompasses 16.41 million square feet of space, with another 104,000 square feet under construction. The Lehigh Valley office market has an overall vacancy rate of 8%, and a 10.1% vacancy rate excluding owner-occupied and medical office space.

“The Lehigh Valley office market continues to show strength, especially in Allentown with the official opening of ADP at Five City Center,” Cindy McDonnell Feinberg, CCIM, of Feinberg Real Estate Advisors, said in the report.

“As landlords begin to see more competition for tenants, because of the slight uptick in office vacancy rates, it will become more important for them to offer incentives and/or begin refreshing older properties to compete with newer properties,” she said. “Several new or renovated office buildings are planned which should provide great options for tenants in the market.”

The addition of the 295,000 square foot Five City Center building in Allentown is the biggest addition to the regional office market so far this year. Payroll processing giant ADP held a ribbon-cutting ceremony on Oct. 10 for new campus there, which will house 1,000 employees.