MARKET HIGHLIGHT, AUGUST 2008

NORTHEAST PENNSYLVANIA MARKET HIGHLIGHTS

Retail Market

The Northeast Pennsylvania region remains relatively healthy overall, with a particularly strong retail market. The area, which includes Wilkes-Barre/Scranton, Hazleton, Mount Pocono and Stroudsburg, offers an excellent quality of life and good economic growth. Scranton has also garnered national attention as of late, due to its recognition as the setting for the popular television show, The Office.

Across the country, development has slowed with big-box retailers scaling back expansion. However, retail activity in Northeast Pennsylvania remains stable as new and existing retailers seek to target new audiences and fill holes in these growing, under-served markets. Some of the more active developers in the region include DEPG Group, Charles Townsend of Anchor Associates, Larry Hirshland of Hirshland & Company, Zamias Properties, and Jeffrey R. Anderson Real Estate.

The region has seen several retail projects emerge recently, all of which are having a strong economic impact on the area. These new projects include the Shoppes at Montage, which serves as the area’s lifestyle center; The Shoppes at Stroud, a Best Buy anchored center; and Mount Airy Casino & Resort in Mount Pocono. There are also several other project’s coming on line in the next year or two, such as Taylor Commons and Pittston Crossings, both Wal-Mart Super Center anchored centers; Bartonsville Plaza, a Lowe’s/Kohl’s anchored center; and Shoppes at Crossroads, a Giant Supermarket anchored center.

In general, the strongest development in the area is taking place in the fringe areas of the established Wilkes-Barre/Scranton markets, as well as the Stroud & Mount Pocono areas. These areas are benefitting from improved transportation and they are becoming popular bedroom communities for commuters to New York and Philadelphia. Expansion is set to continue as there is still developable land for both commercial and residential projects available in these areas.

Most retailers with a presence in the region have long been established there; however, there is a need for additional locations in order to serve the market properly. As of late, there have been new retailers in the area with significant square footage, including Best Buy and Barnes & Noble, with numerous others scheduled to open in late 2008 and early 2009.

Retail leasing remains strong with Best Buy, Giant Food Stores, Petsmart, Borders, Old Navy, Linens N’ Things, and Lowe’s all signing new deals. Vacancy rates are relatively low, and remain in the 6 percent to 8 percent range.

The Northeast Pennsylvania region will continue to be a bright spot, from both a general commercial real estate and retail standpoint. Expect to see larger markets such as Stroudsburg and Mount Pocono, and smaller submarkets such as St. Clair and Tamaqua grow even more in the near future.

— Brad Rohrbaugh is a partner at  Coldwell Banker Commercial Bennett Williams

Industrial Market

Great Location, Low Cost and Ready Supply

An area that many have traveled through has become the place many have stopped to do business.  Northeast Pennsylvania along the I-81 Corridor is where I-81, I-380, I-476, and I-84 converge. This geographic region has long been the stop on the way to or from Washington D.C., New York, Philadelphia, Boston and Upstate New York. 

Northeast Pennsylvania has evolved like other industrialized areas in the United States. Where small and large manufacturers used to dominate, there is now strategic regional distribution and logistic facilities. The answer to why this evolution occurred is a smart combination of great location, low cost and ready supply. 

The location is truly the center point of the northeast and the interstates that service our major metropolitan centers. The region is just 100 miles to both New York City and Philadelphia. Within a 250 mile ring are Boston, Washington D.C., Baltimore, Toronto, Cleveland, Buffalo, Pittsburgh, Syracuse and Albany.

In December of 2006, Wadley-Donovan Growth Tech, LLC, a national business consultant, issued a report that stated the counties that support the Northeast Pennsylvania I-81 Corridor (Luzerne, Lackawanna, Schuylkill and Monroe) have a competitive cost advantage versus alternative sites in Lehigh Valley, New Jersey and New York. The cost advantage includes lower real estate prices and overall median employee earnings that are 71 percent of the national average and 74 percent of Pennsylvania’s average.

Since January 1, 2000, there have been 57 industrial sale and lease transactions of at least 100,000 square feet in Northeast Pennsylvania. These manufacturing and logistics projects total 26.7 million square feet, which produces an average annual absorption of roughly 3.5 million square feet. If transactions of less than 100,000 square feet are added, the total industrial absorption over the past 7.5 years is more than 30 million square feet. This makes Northeast Pennsylvania one of the most active industrial markets in the Mid-Atlantic region.

A few of the companies that have recently chosen Northeast Pennsylvania’s I-81 Corridor for major logistics centers include Lowe’s, Big Lots, J & J Sales and Logistics, TJ Maxx, Circuit City, Sears, Wal-Mart, Michael’s Handcrafts, Kimberly Clark, Amazon.com and Men’s Wearhouse.

Many of these companies received grants, low-interest loans and tax breaks from the Pennsylvania Department of Community and Economic Development and local tax authorities. Area economic development organizations are among the best in the nation and offer a helping hand relocating firms. These agencies have worked with for-profit developers to create many of the area’s more successful business parks.

— Albert Guari is vice president of  Brokerage for Mericle Commercial Real Estate Services/TCN Worldwide

©2008 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.