The Lehigh Valley, Pennsylvania, logistics sector has been successful for so long that it almost feels immune to risk. But things are starting to look interesting one quarter into the year.

CoStar data shows industrial demand within Lehigh Valley cooled off somewhat in 2020. The market’s vacancies climbed by roughly 2% during the turbulent year, and in the past 12 months, more than 1 million square feet of industrial space has been put up for sublease.

Last year saw about 2.4 million square feet of net absorption, the difference between move-ins and move-outs. This isn’t a freakishly low figure, but it is under the market’s historic average and one of its weaker showings since 2010. 

That is somewhat concerning because this curious softening of demand is also occurring at a time when some experts are beginning to caution about the risk of oversaturation. There’s nearly 8 million square feet of speculative space on the way in the Valley, and the major projects that delivered in 2020 remain 50% unoccupied at the end of the first quarter.

In all likelihood, this lull is just a blip, and demand will soon bounce back. But what’s interesting here is Lehigh’s cooldown occurred as the national logistics market was exploding. Lehigh should have done very well last year, and what’s even more intriguing is its neighbors are overperforming notably.

Both Scranton and Reading had banner years in 2020, each seeing over 4 million square feet of net absorption, some of the highest levels ever recorded for either markets. And neither market has slowed since the start of 2021. Multiple 1 million-square-foot deals have been inked in these two markets since January, while Lehigh has seen just a few leases over 200,000 square feet finalize in that same time.

Given the relatively slow pace of last year’s leasing, it looks possible that Lehigh’s vacancies could soften notably this year, but it’s still far too early to say this is a trend. CoStar Advisory Services points out that large-scale projects in the Valley have leased up notably quicker than the national average over the past several years, and Lehigh’s position on the supply chain is just too good to dismiss.

But it might mean that tenants are now more willing to sacrifice the perfect location for cheaper rents and more labor. When it comes to the all-important labor pool, Berks County has Lehigh beat outright. Rents in both markets are considerably cheaper, as well, something Scranton developers have been eager to point out.

For those looking to read the rapidly evolving world of central Pennsylvania logistics, Lehigh Valley is now a market worth monitoring closely.

*Article courtesy of CoStar

For more information about Lehigh Valley space for sale or lease in Lehigh Valley or about any other Lehigh Valley properties for sale or lease, please contact WCRE at 215-799-6900.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Lehigh Valley commercial real estate broker that provides a full range of Lehigh Valley commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Lehigh Valley commercial properties for buyers, tenants, investors and sellers.

Please visit our websites for a full listing of Lehigh Valley commercial properties for lease or sale through our Lehigh Valley commercial real estate brokerage firm.

Market Posted Year-Over-Year Rent Growth of Nearly 5.5% Last Year

The Lehigh Valley, Pennsylvania, industrial market took everything COVID-19 dished out without missing a beat. And it appears ready for whatever 2021 may throw its way.

Lehigh Valley’s unique location and proximity to every major city along the northeastern shore meant at the start of the shutdown, it had a deep base of strong tenants relatively unexposed to risk. This helped keep the market stable through a few turbulent months in the second quarter when leasing activity dried up across the county.

Because COVID-19 has accelerated the growth of e-commerce, demand quickly resumed. Last year ended with nearly 2.5 million square feet of net absorption — the difference between move-ins and move-outs — which kept vacancies stable even as millions of square feet of industrial space came online in the midst of a global pandemic. The market posted year-over-year rent growth of nearly 5.5%, which is incredible considering the chaos surrounding the initial shutdown.

Demand was heaviest in the Fogelsville corridor, where Interstates 78 and 476 intersect. This is one of the state’s best locations for distributors, and 14 of the year’s 52 leases over 10,000 square feet were signed here. There was also an interesting flurry of activity near Easton and close to the airport, where Geodis and Natural Foods each signed for over 1 million square feet in 2020.

This level of activity likely helped give developers the confidence to resume building, breaking ground on more than 7 million square feet last year. Many of these projects are northeast of Fogelsville and hug I-22. There’s several major projects underway around Easton, which offers the most direct access into New York City but also substantial work being done near the Airport.

Given the market’s location and the growth of e-commerce, it is not too surprising that investment exploded in the Valley. Total industrial sales volume was over $730 million, one of the highest levels in market history and the third consecutive year of sales growth. Big buyers on the year included Prudential, Uline, Prologis, and the BlackStone Group.

*Article courtesy of CoStar

For more information about Lehigh Valley space for sale or lease in Lehigh Valley or about any other Lehigh Valley properties for sale or lease, please contact WCRE at 215-799-6900.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Lehigh Valley commercial real estate broker that provides a full range of Lehigh Valley commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Lehigh Valley commercial properties for buyers, tenants, investors and sellers.

Please visit our websites for a full listing of Lehigh Valley commercial properties for lease or sale through our Lehigh Valley commercial real estate brokerage firm.

Region Experiences Surge in New Logistics Hubs

Link Logistics Real Estate is teaming up with Bridge Development Partners to create a 480,000-square-foot industrial campus on a 60-acre site in the Lehigh Valley in Pennsylvania, a hot spot for such projects.

Bridge, headquartered in Chicago, assigned the contract for the vacant site at 428 E. Moorestown Road in Wind Gap to Link after securing all of the necessary development approvals. Link Logistics, the Piscataway, New Jersey-based industrial real estate arm of investment giant Blackstone, has retained Bridge to provide development management services and construct a the industrial facility on its behalf.

Construction on the project is slated is begin this month, with completion expected in December. It is Bridge’s first development in Pennsylvania and will be overseen by Northeast Region Partner Jeff Milanaik and his team, according to a statement from the real estate firm.

With space for industrial development scant and state-of-the-art logistics properties scarce in North Jersey, real estate firms have gone south and west to build warehouse and distribution hubs. That’s sparked a flood of development in the Lehigh Valley, a region that borders on and includes part of the Garden State but mainly encompasses Allentown, Bethlehem and Easton in Pennsylvania.

Although Bridge hasn’t had any projects in the Keystone State previously, it has developed in the New Jersey portion of the Lehigh Valley. The developer built Bridge Point 78, a 3.85-million-square-foot industrial campus with six buildings in Phillipsburg, New Jersey, on a former Ingersoll Rand site.

The project’s first phase was recently purchased by PGIM Real Estate for $275 million, according to CoStar data. The complex has a tenant roster that includes Japanese clothing retailer Uniqlo, Mark Anthony Brands, which distributes White Claw alcoholic seltzer, and lawn-care manufacturer ScottsMiracle-Gro.

“The Lehigh Valley continues to distinguish itself as one of the country’s most vital distribution and logistics hubs, which was critical to our success at nearby Bridge Point 78,” Milanaik said in a statement.

The proposed Lehigh North project would feature 36-foot-clear heights, a cross-docked configuration for its 73 exterior docks, four drive-in doors, 100 trailer positions and parking for 187 cars. The facility is equidistant between Route 78 and Allentown near Route 33 through the Northampton Valley.

The new development would be an addition to Link’s Lehigh Valley portfolio, which totals more than 16 million square feet of industrial space, according to Britton Winterer, the company’s executive vice president and head of development.

It is the second industrial project that Bridge and Link have partnered on, with the two companies developing a 95,000-square-foot industrial facility in Lyndhurst, New Jersey, in 2019.

*Article Courtesy of CoStar

For more information about Lehigh Valley space for sale or lease in Lehigh Valley or about any other Lehigh Valley properties for sale or lease, please contact WCRE at 215-799-6900.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Lehigh Valley commercial real estate broker that provides a full range of Lehigh Valley commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Lehigh Valley commercial properties for buyers, tenants, investors and sellers.

Please visit our websites for a full listing of Lehigh Valley commercial properties for lease or sale through our Lehigh Valley commercial real estate brokerage firm.