10C — January 31 - February 13, 2020 — 2020 Forecast — M id A tlantic Real Estate Journal
www.marej.com
L ehigh V alley , P ennsylvania
By Staci Saeger, NAI Summit Greater Lehigh Valley 2020 Forecast
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locations fall into class B or C office. Prominent office parks filled with an abundance of class A space remain avail- able in Allentown, Bethlehem, Center Valley, and suburban areas; with an average rental rate of $23.77/s/f. Class B and C locations average a rental rate of $18.41/s/f. The rental rates have been at a slow rise since 2018 and only appear to continue to increase through- out 2020, even though leas- ing activity has continued to decline this quarter. As of the new year, the Lehigh Valley held more than 2.5 million s/f
on the market including ap- proximately 20 office sites for sale, with the majority holding less than 50% vacancy. This struggle appears to have no immediate end in sight with ample office buildings being currently built. INDUSTRIAL: MORE, MORE, MORE The demand for industrial buildings has shifted, but is still very present in the Le- high Valley market and will continue to be in 2020. More and more large industrial proj- ects are being completed or are in the works. Presently a
demand for smaller industrial/ flex buildings continues to rise and increasingly is becoming harder to find in target areas, especially locations for sale. With over 136 million s/f of industrial space available in Lehigh, Northampton, Monroe, and Carbon counties, of that three million more s/f is under construction. Almost all of the industrial space being built is larger than 100,000 s/f. Moving forward in 2020, the struggle of finding that small to mid-size industrial/flex space will force companies to consider alterna- tive options.
RETAIL: SAME OLD STORY The state of the retail market is nothing new. As consumer shopping behaviors lean toward the internet to shop, retail real estate will have to continue to adapt and change to keep up. The region holds over 9 million s/f on the market, mostly class B and C, with approximately 9% vacancy rate. Less than a handful of available locations for lease are over 15,000 s/f and only about a handful are available for sale at that size. The average rental rate for class A retail space is $16.80. class B and C is $14.76. Both vacancy rates and rental rates should remain steady through- out 2020. LAND: WHAT’S OUT THERE? As developable land becomes less available, more municipal governments are instituting land preservation programs and creating funds to support those lands into the future. According to the Lehigh Val- ley Planning Commission, the region has gone from about 50% land to approximately 22% of land in the last 15 years. The market includes over 125 acres for lease, almost all commer- cially and industrially zoned, with 88% less than 10 acres in size. Over 2,000 acres are available for sale, with a mix of commercial, industrial, and residential. About 69% of that being less than 10 acres. As more parcels sell or become occupied and the demand in- creases, available land as a fi- nite resource will only continue to increase in value in 2020. Staci Saeger is director of marketing at NAI Summit. Credits can be earned on newly constructed or rehabilitated property, but they may be dif- ficult to claim retroactively due to logistical challenges in quantifying costs of materials. Many firms may be able to take advantage of this news to get even more value out of their real estate. Taxpayers are encouraged to consult their advisors regarding eligibility of past projects and planning con- siderations for future projects. Going green never left, but tax incentives are back in style. Bruce A. Johnson, CRE, is a co-founder and partner at Capstan Tax Strategies. continued from page 8C Green is Back in the Black: The . . .
F F I C E : O N E WORD…GROWING! Currently over one
million s/f of office is under construction in our region. Due to the in- flux of avail- abilities and new space , office owners are left to re-
Staci Saeger
flect on their property and challenging them to consider potential upgrades and incen- tives to attract new tenants. The majority of available
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