Lehigh Valley, Pennsylvania Industrial Market

The Lehigh Valley in Pennsylvania has become home to some of the top industrial developers in the world, with more and more of them looking for additional land positions throughout this fast growing market. Their interest is driven by several factors including the exceptional access to major highway networks, enabling them to reach approximately one-third of the nation’s population within 8 hours, and proximity to the ports, making it an excellent staging area for warehouse and distribution operations. In addition, the Lehigh Valley offers a quality workforce with a strong work ethic.

As a result, the regional industrial market, including the Lehigh Valley, continues to expand. The focus from the development community has resulted in a dramatic increase in land pricing for both raw and improved land sites. Large sites for development are becoming increasingly harder to find, acquire and ultimately develop.

In large response to the recent activity from within the user/tenant community, planning and development of new facilities has shifted to larger buildings, as evidenced by the last 12 to 18 month deal flow residing in facilities larger than 500,000 square feet.

 Some significant developments in the region include Higgins Development Partners’ Arcadia East Industrial Park, which features 1 million square feet of planned industrial development; the 980,000-square-foot second phase of Liberty Property Trust’s Boulder Business Center; Prologis’ Park 33, featuring 2.5 million square feet of industrial space; AMB’s development of 750,000 square feet of space; IDI’s 1 million square feet of planned industrial development on the Route 33 Corridor; First Industrial Realty Trust’s 1  million square feet of planned industrial development; and Majestic Realty’s more than 4 million square feet of industrial development located on Interstate 78 and Route 412.

In the Lehigh Valley, the Route 33 corridor, in particular, is slated to become home to several new distribution facilities, with planned development totaling more than 4 million square feet.  The Route 412 and Interstate 78 interchange at the former Bethlehem Steel site will also see substantial development.

Both seasoned Lehigh developers and new developers to the market — such as Higgins, Majestic, First Industrial, IDI, DP Partners and Prologis — that have entered the market in the last few years are concentrating their new development efforts on the east side of the Valley along the Route 512 and Hanoverville Road corridor, as well as the Route 33 corridor. New development is also occurring further south along the Route 100 corridor on the west side of the valley. Traditionally, the concentration of the development had been on the west end along Interstate 78 and Route 100. Depending on the site, these developers have been able to attract manufacturing, high-tech, distribution, flex and office tenants. Several large leases have been signed lately: AmerTac has leased 210,000 square feet of space at 250 Boulder Drive in Upper Macungie Township, and Lightning Source has leased 130,000 square feet of space at 860 Nestle Way in Fogelsville.

Despite all of the speculative developments underway, there are several large tenants whose need for space in the region continues to increase. Tenants that are able to find the space they need are encountering Class A rental rates of $4.35 to $4.50 triple net per square foot. Vacancy rates in the Lehigh Valley are ranging between 10 and 11 percent.

The regional industrial market, including the Lehigh Valley, continues to grow.  Land pricing in the Lehigh Valley for raw and improved industrial land also continues to rise.  Large sites for development are becoming increasingly harder to find, acquire and ultimately develop. 

In light of these market dynamics, the Lehigh Valley has become and will continue to be a good location for industrial users including distribution and manufacturing.  This is due to the physical location of the Lehigh Valley, the proximity to New Jersey and the ports, the access to major interstate networks and the workforce.  It also offers an ever-widening array of amenities for individuals and families who choose to call the Lehigh Valley home as well as new businesses looking to relocate to the area.

— Michael Bartolacci is the senior vice president for The Garibaldi Group/CORFAC International in Bethlehem, Pennsylvania.

©2007 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.

Search Property Listings

Requirements for
News Sections

Market Highlights and Snapshots

Editorial Calendar

Today's Real Estate News