COMMERCIAL REAL ESTATE REPORT - ISSUE #026 2021 - Lehigh Valley ...
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COMMERCIAL
REAL ESTATE REPORT
ISSUE #026
Q22021
One of the core principles of the Lehigh Valley Economic Development Corporation (LVEDC)
is to serve as the leading source of economic data and market intelligence on Lehigh Valley’s
economic assets and resources to serve our economic strategies, marketing efforts, and the
needs of our stakeholders. To that end, LVEDC prepares a series of quarterly reports about the
real estate climate in Lehigh Valley. This report focuses on the region’s office, industrial, and flex
markets.
CURRENT CONDITIONS
The Lehigh Valley is the fastest-growing region in Pennsylvania for the population between
ages 18 and 34. Lehigh County ranked No. 1 of all the state’s 67 counties in population
growth among that demographic, and Northampton County ranked No. 4.
Industrial and economic growth remains strong As vaccination rates increase, Lehigh Valley
in the region. The Lehigh Valley Economic employers have begun releasing guidance
Development Corporation (LVEDC) is tracking and policies to employees about the return to
an active pipeline of 32 companies considering the office. Reopening plans have varied across
a move to or expansion in the region as of the the region, with some offices planning full or
end of Q2 2021, 21 of which are manufacturing phased reopenings, and others approving
companies. hybrid schedules. LVEDC surveyed regional
companies in July about their plans to return to
Demand for smaller-footprint industrial space their offices. This report details the information
remains high. Industrial buildings in the range that companies like Olympus, B. Braun, ADP,
of 20,000 SF to 80,000 SF have the lowest and others shared with us.
vacancy rate in the Lehigh Valley, but the
least amount of inventory under construction. The Lehigh Valley office market currently
Regional vacancy rates for that size range comprises 27.7 million square feet of inventory;
are 2.5%, compared to 7.9% for 80,000 SF excluding medical or owner-occupied space,
to 300,000 SF, and 5.2% for 300,000 SF to the total rentable office space is 16.9 million
500,000 SF. square feet.
The Lehigh Valley has a total of 135 million This report also includes notable commercial
square feet of industrial inventory as of Q2 real estate sales and leases from the second
2021, with an overall vacancy rate of 4.8%. quarter of 2021. This includes the Rockefeller
Group’s sale of 951 Willowbrook Road in Allen
In terms of office space, the Lehigh Valley Township for $201.5 million, the largest sale
is still the most affordable option for Class A price for a single industrial building over the
space among nearby regions in Pennsylvania last five years in the Lehigh Valley.
and New Jersey. The Lehigh Valley’s direct
asking rent for Class A is $23.68 per square
foot, compared to $32.94 in Plymouth Meeting/
Blue Bell, and $49.13 in University City in
Philadelphia.
Cover photograph courtesy of Jaindl Enterprises.Jaindl Enterprises in the second quarter began raising steel for its six-story office
building, the first project in the larger Waterfront development along Allentown’s stretch of the Lehigh River.
2 COMMERCIAL REAL ESTATE REPORT • Q2 2021Lehigh Valley
SNAPSHOT: INDUSTRIAL SPACE
MARKET SUMMARY
There is nearly 7 million square feet of
industrial space under construction.
135M 4M $6.97 7M
Total Space (SF) Q2 Net Absorption (SF) Average Asking Rent (NNN) Total Under Construction (SF)
4.8% 5.3M 15.2% 5.08M
Total Vacancy 2021 Net Absorption (SF) Rent Change Since Q2 2020 2021 Deliveries (SF)
SUPPLY & DEMAND (SF) INDUSTRIAL FOOTPRINTS
4M
Total Inventory
2.7M 135 Million SF
2.4M
1.5M Space Under
1.3M Size of
913K 932K 1M Construction as
811K Building
% of Inventory
20K-80K 2%
-1.2M 80K-300K 2.5%
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
300K-500K 13.8%
SQUARE FEET Deliveries Absorption
Over 500K 6.6%
Smaller footprint buildings have
ASKING RATE (PER SF) the lowest vacancy rate but the
least amount of inventory under
$7.63 construction.
$7.22 $7.19
$7.07
$6.60 $6.61 $6.97
$6.48 $6.51
Industrial space
$6.40 $6.40 $6.40 $6.40 under construction
$6.25
in the Lehigh Valley
$6.05
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
at the end of Q2
was equal to
Combined 20K to 80K >300,000 SF
5.2% of
existing
Asking rates for buildings between 20,000 and 80,000
square feet has risen faster in the last 12 months than the
industrial
overall rates per square foot for industrial buildings. space.
Sources: CoStar, LVEDC Research
COMMERCIAL REAL ESTATE REPORT • Q2 2021 3Lehigh Valley
SNAPSHOT: OFFICE SPACE
MARKET SUMMARY
The market summary includes total office space.
27.7M -23.2K $16.31 794.4K
Total Space (SF) Q2 Net Absorption (SF) Average Asking Rent (NNN) Total Under Construction (SF)
9.4% -206.8K 0.8% 0
Total Vacancy 2021 Net Absorption (SF) Rent Change Since Q2 2020 YTD Deliveries (SF)
Rentable Office Space 16.9M $16.66
Excluding Owner-Occupied and Medical Total Space (SF) Average Asking Rent (NNN)
10.7%
VACANCY RATE (PER SF) UNDER CONSTRUCTION (SF)
13.0% Owner Occupied Rentable
12.1% 12.0%
12.0% Q2 2020 736,984 0
10.8%
11.0% 10.4%
9.90% Q3 2020 632,884 0
10.0% 9.30% 9.40%
8.60% Q4 2020 632,884 0
9.0%
8.20%
8.0% 7.60% Q1 2021 794,432 161,548
7.0%
Q2 2021 794,432 161,548
Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021
Total Office Office w/o Medical, Owner-Occupied
Office construction is driven by the owner-
occupied Air Products new campus in Upper
Vacancy rates for office space have Macungie Township and a rentable office
increased since the spring of 2020 as
building in the Waterfront project in Allentown.
more office workers shifted to remote work.
CLASS A OFFICE SPACE The Return to the Office:
A key indicator for the Lehigh Valley office market
Location Price Per SF
will be the return of remote workers to offices. LVEDC
Lehigh Valley $23.68 spoke with several office-based companies in July
Central Bucks County $26.16 about plans to return to the office. Companies are
King of Prussia $28.12 monitoring CDC and state guidance, and their plans
are subject to change. Of the companies we spoke
Route 78 (NJ) $30.52
with, ADP began a phased return to the office in
Plymouth Meeting / Blue Bell $32.94 June, IotaComm returned with a hybrid model in
Radnor with Hudson Waterfront (NJ) $45.48 July, Netizen continues a hybrid model for office and
University City in Philadelphia $49.13 remote work, and B Braun and Olympus are planning
returns with a hybrid model in September. LVEDC
Lehigh Valley has the lowest asking rent for will continue to monitor and analyze trends and
Class A office space among nearby regions, space requirements for office-based Lehigh Valley
according to a recent JLL report. companies.
Sources: CoStar, LVEDC Research
4 COMMERCIAL REAL ESTATE REPORT • Q2 2021BROKER PERSPECTIVE
“The Lehigh Valley has continued to
outpace the majority of the nation in
industrial absorption. The expansion of
the industrial market has been energized
by the Lehigh Valley’s location, excellent
labor and overall quality of life. We
see these trends continuing for the
foreseeable future.”
William Wolf
Executive Vice President
CBRE Advisory & Transaction Services
PROSPECT PIPELINE
Of the 32 industrial prospects, 27
The Lehigh indicated how much space they needed:
Valley Economic
Development Total Square Footage
Corporation had 3,400,305
Requested
an active pipeline
of 32 companies Average Square Footage
11 21 Requested
125,937
considering a move
to or expansion in Median Square Footage
Lehigh Valley as of the 75,000
Requested
end of Q2 2021.
Number of Prospects
2
*Of the 11 non-manufacturing Requesting 500,000+ SF
prospects, nine were Number of Manufacturing Prospects
distribution. Number of Non-Manufacturing Prospects* Number of Prospects
25
Requesting 200,000 SF or less
Source: LVEDC Research. *Not all prospects identify a square footage requirement.
COMMERCIAL REAL ESTATE REPORT • Q2 2021 5BROKER PERSPECTIVE
“Office leasing and office sales activity in the Lehigh Valley remains sluggish. On a positive note, larger employers
such as Olympus, B. Braun and ADP are returning to the office, many of them offering hybrid work schedules for
their employees. Next up for completion of office environments is the new Air Products Corporate Headquarters
in Upper Macungie and the construction of the first office building on the Waterfront in the City of Allentown.”
Cindy McDonnell Feinberg, CCIM, Feinberg Real Estate Advisors, LLC
Q2 2021 COMMERCIAL REAL ESTATE TRANSACTIONS
NOTABLE SALES
SALE
PROPERTY BUYER SELLER PRICE MUNICIPALITY CLASS
951 Willowbrook Centerpoint
Rockefeller Group $201,500,000 Allen Township Industrial
Road Willowbrook LLC
Lineage PA Re 2 Orefield Cold Storage Dist
3824 Route 309 $33,750,000 North Whitehall Industrial
LLC Cent Inc
2645 Mitchell Lineage PA Re 2
Ocsii Inc $23,750,000 Allentown Industrial
Avenue LLC
6355 Farm Bureau Riverbend Allentown Upper Macungie
Jamble Enterprises $11,700,000 Industrial
Road Properties I LLC Township
2601 Baglyos Bethlehem
Hamco Realty LLC J2 Properties LLC $5,200,000 Industrial
Circle Township
601 E. Highland Schaedler Yesco
Joseph A. Zipley $2,125,000 Allentown Industrial
Street Distribution Inc
Francesca Associates
850 13th Avenue 850 13 LLC $1,750,000 Bethlehem Industrial
LLC
4937 Hanoverville Bethlehem
LVTC LI Owner LLC Joseph M. Pokojni Jr. $1,725,558 Industrial
Road Township
NOTABLE LEASES
LANDLORD
PROPERTY SF REPRESENTATIVE TENANT MUNICIPALITY CLASS
Lee & Associates of
7378 Airport Rd 450,000 Smart Warehouse East Allen Township Industrial
Eastern Pennsylvania LLC
Feather Way 294,240 CBRE Bethlehem Industrial
8615 Congdon Hill Sun Opta Grains & Lower Macungie
271,374 CBRE Industrial
Drive Foods Township
9747 Commerce Lee & Associates of Weisenberg
211,134 Industrial
Circle Eastern Pennsylvania LLC Township
2325 Newlin Mills Lee & Associates of
163,338 Palmer Township Industrial
Road Eastern Pennsylvania LLC
600 Brighton Street 160,000 CBRE Yellow Supply Fountain Hill Industrial
2685 Opus Way 139,000 JLL Bethlehem Township Industrial
South Whitehall
1436 Eck Road 125,000 Gelcor Realty Industrial
Township
Sources: Lehigh and Northampton County Real Estate Tax Records, LVEDC Research, CoStar
*CoStar, a leading source of real estate news, reported that investors spent more than $500 billion in seven markets around Philadelphia,
and Lehigh Valley accounted for a third of those transactions.
6 COMMERCIAL REAL ESTATE REPORT • Q2 2021“President Joe Biden recently kicked off his Made in America program with a visit to the Mack Trucks assembly
plant in Lower Macungie Township. It was very appropriate that he chose the Lehigh Valley to highlight this
important initiative. Not only does the region have a long and rich history of manufacturing, but it also remains
the cornerstone of our economy. Manufacturing is in the region’s DNA with about 700 manufacturers and 33,000
workers making everything from guitars to medical devices to Mack Trucks. The Lehigh Valley proves every day
that America still makes things.”
Don Cunningham
President & CEO, Lehigh Valley Economic Development Corporation (LVEDC)
LEHIGH VALLEY DEMOGRAPHICS
687,508
LEHIGH VALLEY
POPULATION
Two of only 23 Pennsylvania counties that
have increased in population since 2010. 6.2%
POPULATION CHANGE (2010-2020)
Lehigh County*
2020 374,557 DOMESTIC INTERNATIONAL
7.2% 2010 349,508
BIRTHS
41,993
DEATHS
33,966
MIGRATION
-5,516
MIGRATION
18,420
Northampton County
2020 312,951
5.1%
DOMESTIC INTERNATIONAL
BIRTHS DEATHS MIGRATION MIGRATION
2010 297,704 28,541 29,789 3,389 6,058
POPULATION AGES 18-34 RELOCATIONS (% CHANGE 2019-2020)
MOVES WITHIN PHILADELPHIA
2020 149,069 -8% -2%
10.7%
THE LV METRO REGION
2010 134,616 NEW YORK
13.7%
EAST STROUDSBURG
0.2%
METRO REGION METRO REGION
*Lehigh County ranks in the top 1% of all U.S. counties for migration from international locations, according to SelectUSA, a program of the
U.S. Department of Commerce. Sources: 2020 U.S. Census, U.S. Census Bureau Population Estimates Program and CBRE Research.
TRACKING LEHIGH VALLEY’S RECOVERY
The Lehigh Valley’s growing population
is attractive to companies looking to June 2021 June 2020
re-shore operations or shorten supply
Unemployment Rate 6.7% 14.3%
chains in an affordable location in the
heart of the Northeast market. Employment 361,000 334,100
Manufacturing 39,200 37,400
Logistics 34,000 31,300
Retail 37,700 35,600
Professional/Business Services 46,500 45,700
Health Care/Social Assistance 63,500 61,200
Leisure/Hospitality 35,000 22,400
Sources: Pennsylvania Department of Labor and Industry, U.S. Bureau of Labor Statistics.
Employment figures are for the Metropolitan Statistical Area, which includes the Lehigh Valley plus Carbon and Warren counties.
COMMERCIAL REAL ESTATE REPORT • Q2 2021 7LVEDC Commercial Real Estate Report designed by Michelle Chrin.
©2021 Lehigh Valley Economic Development Corporation. All Rights Reserved. 08.2021
Our Mission
The mission of Lehigh Valley Economic
Development Corporation is to market the
economic assets of the Lehigh Valley and to
create partnerships to lead the recruitment,
growth, and retention of employers.
Our Vision
Our vision is of a diverse Lehigh Valley
economy that provides economic growth
and opportunity for people of all skills and
education and strengthens all our cities,
boroughs, and townships.
Our Priorities
• Market the economic assets of
the Lehigh Valley
• Recruit companies in targeted
economic sectors
• Support the growth and retention
of new and existing employers
• Promote and coordinate a skilled
and prepared workforce
• Provide intelligence and data
on the Lehigh Valley economy
• Expand public and private LVEDC
investment and build partnerships
for economic growth
2158 Avenue C, Suite 200 Bethlehem, PA 18017
Phone: 610-266-6775 • Fax: 610-266-7623
www.lehighvalley.org
Lehigh Valley
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