The PA I-78I-81 Logistics Corridor

Pennsylvanias
Winter 2016
FIGURE 1: THE PA I-78/I-81 INDUSTRIAL CORRIDOR
CBRE RESEARCH
P EN N S YLVA N I A S I - 7 8 / I - 8 1 LO G I S T I CS CORRI D OR
The Pennsylvania I-78/I-81 Logistics Corridor, stretching from

Northeastern Pennsylvania, through the Lehigh Valley, and into Central
Pennsylvania, has emerged as one of the nations most sought-after areas
to warehouse and distribute goods.
his report has been created to meet the increasing need
CLASS :
from tenants, owners, investors, developers, and other
Class A: the most prestigious warehouse distribution
interested parties for accurate data to evaluate market trends.

The inventory of warehouse distribution properties in this
report are institutional-grade, meaning their space is
functional to most modern users. The majority of the 178.7
million sq. ft. of properties in this report have been built
within the past 25 years.
However, a significant portion of the value in this report lies in
buildings competing for premier industrial users. These

buildings typically have been built more recently, offering
modern systems, higher quality interior and exterior
finishes, high density sprinkler systems, and higher
clearance heights.
Class B: warehouse distribution buildings competing for a
wide ranges of users. Interior and exterior finishes are fair
to good, while the systems are functional and adequate.
its granularity. We have identified each property so that we

can analyze the market by the following attributes:
SUBMARKET:
Central Pennsylvania (Central PA)
FIGURE 2: NEW CAPABILITIES TO ANALYZE DATA FOR

INSITITUTIONAL-GRADE WAREHOUSE DISTRIBUTION
PROPERTIES
Lehigh Valley
Northeastern Pennsylvania (Northeastern PA)
SIZE :
100,000-300,000 sq. ft.
Submarket
Size
300,000-500,000 sq. ft.

Over 500,000 sq. ft.
Class
Source: CBRE Research, Q2 2016.

CBRE RESEARCH
FIGURE 3: THE RISE OF THE MASSIVE, MODERN DISTRIBUTION WAREHOUSE

Class A Properties Greater than 500,000 sq. ft.
(MSF)
No segment of the PA I-78/I-81 Corridor has grown as quickly as the
80
inventory of Class A warehouse properties sized over 500,000 sq. ft.

Figure 3 illustrates the increase in the Class A inventory of buildings
70
greater than 500,000 sq. ft. since 2006 (134% change 2006-Q2
60
2016). The Central PA submarket has seen its inventory of Class A
50
properties greater than 500,000 sq. ft. grow faster than the other two
40
major submarkets (Lehigh Valley and Northeastern PA) since 2006
30
(159%).
20
2015
2014
2013
2012
Lehigh Valley
Central PA
Q2 2016
Northeastern PA
2011
2010
2009
2008
2007
2006
10
FIGURE 4: LARGER WAREHOUSES ARE INCREASINGLY CHARACTERISTIC OF THIS MARKET

Inventory Composition of I-78/I-81
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Due to the growth of larger warehouses, Figure 4 shows how

the composition of the regions inventory has changed in the last
ten years.
26%
33%
19%
19%
56%
48%
2006
100,000-300,000 SF
Q2 2016
300,000-500,000 SF
Over 500,000 SF

FIGURE 5: DEMAND AND VACANCY
Net Absorption (Left Side)

4
CBRE RESEARCH
YTD
Q2 2016
2015
2014
2013
2012
2011
4
2
2010
0
-2
2009
20
18
16
14
12
10
8
6
2008
16
14
12
10
8
6
4
2
2007
(%) Despite a considerable amount of supply over the last several years,
2006
(MSF)
Direct Vacancy Rate (Right Side)

strong demand has kept pace. As a result, direct vacancy along the
I-78/I-81 corridor hovers near an historic low. The Lehigh Valley, with
its relative scarcity of land, persistently exhibits the lowest vacancy
rates along the corridor.
Bigger and better: the construction of

warehouses sized over 500,000 sq. ft. has
been the largest source of inventory growth
along the PA I-78/I-81 corridor over the
past ten years.
CBRE RESEARCH
FIGURE 6: RECORD ASKING RENTS AVERAGE DIRECT ASKING LEASE RATE

$4.50
As a result, the average asking rent reached a new all-time high
$4.30
(Figure 6). The highest average asking rents, at $4.98 per sq. ft. in
Q2 2016, are found in the Lehigh Valley.
$4.10
$3.90
$3.70
$3.50
Q2 2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
$3.30
FIGURE 7: PA 78/81 CORRIDOR NET ABSORPTION BY CLASS

Remarkably, as shown in Figure 6, Class A warehouses have
(MSF)
not recorded any annual negative net absorption during the
18
last 10 years. The only negative absorption was limited to Class

B warehouses. Furthermore, this negative absorption was only
experienced, in aggregate, by properties under 500,000 sq. ft.
12
26%
33%
19%
48%
19%
56%
FIGURE 8: NOTABLE, NEW TENANTS TO THE PA I-78/I-81 CORRIDOR

The growth and increasing importance of this market is demonstrated by some of the global brand names who have located here.
CBRE RESEARCH
2015
2014
2013
2012
2011
2009
2010
Class B
YTD
Q2 2016
Class A
2008
2007
2006
-4
PA I-78/I-81 Industrial Corridor Statistics

(Institutional-grade Warehouse Distribution Properties)
ALL PROPERTIES
2006
NUMBER OF
367
BUILDINGS
INVENTORY (SF) 117,986,484
DIRECT
9.30%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.22
(SF/YR., NNN)
YTD NET
ABSORPTION (SF) 7,339,806
CLASS A PROPERTIES
2006
NUMBER OF
130
BUILDINGS
DIRECT
13.63%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.12
(SF/YR., NNN)
YTD NET
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
387
403
414
415
416
423
428
443
461
476
128,533,575
137,019,553
142,700,278
143,705,908
144,843,908
149,776,750
153,915,036
161,145,325
169,995,154
178,742,607
10.50%
14.62%
18.33%
15.49%
12.77%
14.30%
13.18%
6.94%
6.68%
7.73%
$4.15
$4.18
$3.91
$3.75
$3.68
$3.79
$3.74
$3.90
$4.18
$4.27
4,231,615
-702,684
-821,090
4,794,026
5,853,291
2,309,061
5,406,073
14,959,382
9,035,280
3,986,112
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
149
165
176
177
178
183
188
202
218
232
62,375,670
70,840,758
76,562,245
76,815,245
77,953,245
82,423,245
86,526,607
93,713,062
101,790,626
110,278,079
14.97%
21.52%
22.23%
16.87%
12.92%
14.48%
12.82%
5.02%
7.13%
9.03%
$4.23
$4.31
$4.04
$3.97
$3.98
$4.08
$3.92
$4.06
$4.29
$4.51
4,307,267
76,775
3,751,610
4,906,130
4,329,127
2,876,258
5,192,445
11,980,836
5,811,512
3,876,935
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
243
246
246
245
248
248
255
262
265
41,233,478
41,778,098
41,734,304
41,634,304
42,309,069
42,328,508
43,509,590
44,877,374
45,630,874
11.01%
16.00%
16.19%
15.95%
16.21%
12.77%
8.08%
9.21%
8.44%
$4.02
$3.78
$3.63
$3.59
$3.80
$3.85
$4.08
$4.12
$4.13
-923,810
-1,776,363
-74,302
228,584
761,627
1,681,288
2,596,200
1,113,027
509,271
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
68
72
73
73
73
75
77
82
87
25,755,125
27,381,812
27,913,444
27,913,444
27,929,521
28,801,493
29,419,293
31,353,565
33,487,568
22.11%
34.12%
30.14%
23.35%
23.20%
21.60%
12.95%
11.42%
11.07%
$4.10
$3.85
$3.68
$3.78
$3.93
$3.80
$3.91
$3.96
$4.08
135,331
-2,076,264
1,422,171
1,894,195
55,069
1,129,955
3,029,047
2,162,583
780,692
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
85
92
96
96
98
102
105
111
117
124
64,294,102
70,030,950
73,540,368
74,058,160
75,296,160
79,538,160
82,785,035
88,216,442
93,764,215
99,624,165
7.54%
13.99%
13.77%
9.56%
7.09%
10.17%
10.46%
4.37%
3.89%
6.28%
$4.12
$4.30
$4.07
$3.94
$3.61
$3.60
$3.53
$3.79
$4.34
$4.47
5,043,516
85,795
3,031,537
3,446,157
3,730,512
1,492,365
2,594,830
9,334,135
5,759,670
2,696,149
100,000 - 300,000 SQ. FT. PROPERTIES

2006
2007
NUMBER OF
232
240
BUILDINGS
INVENTORY (SF) 39,391,083 40,820,298
DIRECT
8.85%
10.58%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.94
$4.19
(SF/YR., NNN)
YTD NET
345,592
300,000 - 500,000 SQ. FT. PROPERTIES
2006
2007
NUMBER OF
59
62
BUILDINGS
INVENTORY (SF) 22,391,675 23,419,175
DIRECT
12.45%
18.49%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.89
$4.15
(SF/YR., NNN)
YTD NET
ABSORPTION (SF) 1,508,959 -1,157,493
OVER 500,000 SQ. FT. PROPERTIES
2006
NUMBER OF
76
BUILDINGS
DIRECT
8.36%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.58
(SF/YR., NNN)
YTD NET
CBRE RESEARCH
CENTRAL PA
OVERVIEW
FIGURE 9: CENTRAL PENNSYLVANIA SUBMARKET MAP
Existing Institutional-grade
Warehouse Distribution Locations
CBRE RESEARCH
FIGURE 10: INVENTORY COMPOSITION OF PA I-78/I-81 CORRIDOR
19%
52%
NORTHEASTERN
PA
The Central Pennsylvania (Central PA) submarket has been the

historical core of the PA I-78/I-81 logistics corridor, specializing as a
CENTRAL PA
super-regional node for bulk warehousing. The 90.5 million sq. ft. of
institutional-grade warehouse space in Central PA encompasses 52%
of the 78/81 corridors inventory.
Though the majority of the warehouse distribution inventory remains
in Central PA, the Lehigh Valley and Northeastern PA have grown
more rapidly over the past 10 years. Nonetheless, the one, important
segment in Central PA that has grown faster than the Lehigh Valley
31
and Northeastern PA is the Class A inventory greater than 500,000
sq. ft.
LEHIGH VALLEY
FIGURE 11: AS GOES CENTRAL PA, SO GOES THE I-78/I81 CORRIDOR DIRECT VACANCY RATES
Due to Central PAs larger share of the PA I-78/I-81 corridor, most
(%)
of the corridors market indicators are heavily influenced by and
25
strongly correlate with Central PA. The Direct Vacancy Rate, as seen
in Figure 11, for example, is indicative of the strong relationship
20
between Central PAs trends and the 78/81 corridor.
15
Among the counties in the Central PA submarket, Lancaster County
10
historically maintains the lowest vacancy rates.
2015
2014
2013
2012
2010
2011
PA I-78/I-81 Corridor
Q2 2016
Central PA
2009
2008
2007
2006

FIGURE 12: NET ABSORPTION BY SUBMARKET CENTRAL PA IS USUALLY THE BULK OF DEMAND
(MSF)
16
14
12
10
8
6
4
2
0
-2
-4
In most years, demand is strongest in Central PA (in terms of absolute

total sq. ft. absorbed). In the last recession, Class B warehouses
2015
2014
2013
2012
2011
Lehigh Valley
Northeastern PA
YTD Q2 2016
Central PA
2010
2009
2008
2007
2006
experienced the bulk of the negative absorption.
CBRE RESEARCH
The Central PA submarket comprises the

bulk of the PA I-78/I-81 corridors inventory,
currently 90.5 million sq. ft. of institutionalgrade warehouse space.
10
CBRE RESEARCH
Central PA Statistics
ALL PROPERTIES
2006
NUMBER OF
194
BUILDINGS
DIRECT
7.66%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.29
(SF/YR., NNN)
YTD NET
CLASS A PROPERTIES
2006
NUMBER OF
63
BUILDINGS
DIRECT
11.89%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.07
(SF/YR., NNN)
YTD NET
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
201
206
213
213
215
219
222
222
228
236
65,910,931
68,315,206
72,656,944
73,022,743
74,125,743
77,333,035
80,378,121
80,305,663
85,104,571
90,569,721
9.68%
15.60%
21.29%
16.80%
15.46%
18.15%
17.71%
7.36%
5.71%
8.95%
$4.02
$4.02
$3.90
$3.73
$3.68
$3.76
$3.72
$3.84
$4.31
$4.52
-20,322
-2,196,625
-556,093
2,931,623
2,769,724
684,142
2,773,711
8,075,994
6,249,071
1,957,049
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
70
75
82
82
84
87
90
90
96
104
27,736,668 30,140,943 34,523,263 34,523,263 35,626,263 38,668,263 41,678,425 41,678,425 46,517,225 51,982,375
16.84%
22.77%
27.37%
18.77%
16.19%
18.55%
19.41%
4.16%
5.54%
11.56%
$4.11
$4.19
$4.11
$4.04
$4.05
$4.06
$3.91
$3.89
$4.32
$4.58
-201,323
-49,675
1,854,083
2,968,140
2,022,516
1,635,931
2,093,524
5,965,049
4,387,811
1,957,049
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
125
126
126
126
127
127
127
128
128
100,000 - 300,000 SQ. FT. PROPERTIES

2006
2007
NUMBER OF
123
124
BUILDINGS
INVENTORY (SF) 20,675,801 20,907,051
DIRECT
6.46%
8.96%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.88
$4.01
(SF/YR., NNN)
YTD NET
408,352
-333,409
ABSORPTION (SF)
300,000 - 500,000 SQ. FT. PROPERTIES
2006
2007
NUMBER OF
33
35
BUILDINGS
INVENTORY (SF) 12,376,006 13,018,506
DIRECT
13.04%
15.02%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.68
$3.83
(SF/YR., NNN)
YTD NET
601,338
-341,279
ABSORPTION (SF)
2006
NUMBER OF
38
BUILDINGS
DIRECT
6.22%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.77
(SF/YR., NNN)
YTD NET
21,003,051 21,151,051 21,319,257 21,319,257 21,484,549 21,503,988 21,431,530 21,690,483 21,690,483

12.90%
17.00%
15.89%
15.56%
22.39%
16.99%
7.82%
7.79%
7.33%
$4.02
$3.78
$3.67
$3.69
$3.90
$3.92
$4.00
$4.26
$4.32
-1,070,842
-670,555
334,876
179,282
-1,268,721
1,175,968
1,652,908
647,283
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
37
39
39
39
39
40
40
41
44
13,819,481 14,503,801 14,570,433 14,570,433 14,570,433 14,949,205 14,949,205 15,300,160 16,550,860

21.40%
35.86%
28.79%
23.41%
23.12%
24.39%
11.29%
6.33%
12.41%
$3.95
$3.89
$3.77
$3.75
$3.74
$3.70
$3.78
$4.02
$4.57
-200,386
-1,559,728
1,071,851
784,930
42,366
100,710
1,959,034
1,069,741
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
42
44
48
48
50
53
55
55
59
64
31,985,374
33,492,674
37,002,092
37,133,053
38,236,053
41,278,053
43,924,928
43,924,928
48,113,928
52,328,378
7.98%
14.90%
18.04%
12.62%
12.37%
14.20%
15.79%
5.80%
4.58%
8.53%
$4.16
$4.07
$4.00
$3.74
$3.57
$3.61
$3.47
$3.79
$4.41
$4.57
654,366
-925,397
1,674,190
1,524,896
1,805,512
1,910,497
1,497,033
4,464,052
4,532,047
1,957,049
CBRE RESEARCH
11
LEHIGH VALLEY
OVERVIEW
FIGURE 13: LEHIGH VALLEY PENNSYLVANIA SUBMARKET MAP
Warehouse Distribution
Locations
12
CBRE RESEARCH
FIGURE 14: CHANGE IN TOTAL INSTITUTIONAL-GRADE INVENTORY (2006 Q2 2016)

(%)
70
The Lehigh Valley has experienced the fastest growth among the
60
78/81 submarkets. Since 2006, its inventory of institutional grade
50
warehouse distribution properties grew 66% to 55 million sq. ft.
40
It owes its growth to its proximity to New York City via toll-free
30
highways, the increasing scarcity of land in New Jersey, and the
20
trends towards expedited delivery of goods to consumers from

warehouses.
10
0
Lehigh Valley
Northeastern PA
Central PA
FIGURE 15: AVERAGE DIRECT ASKING LEASE RATES (Q2 2016)

The advantageous location of the Lehigh Valley and its significant
$5.50
growth has contributed to the highest, average rents along the 78/81
$5.00
corridor. Q2 2016 average asking rents were $4.98 per sq. ft., while
Class A rents reached $5.29 per sq. ft. Rents in the Lehigh Valley
$4.50
have persistently been the highest along the PA I-78/I-81 corridor
$4.00
since 2006.
$3.50
$3.00
$2.50
$2.00
Lehigh Valley
Northeastern PA
Central PA
FIGURE 16: DIRECT VACANCY RATES

(%)
The direct vacancy rate of the Lehigh Valley remains near historic
20
18
16
14
12
10
8
6
4
2
0
lows, despite the significant growth of the inventory.

The tightest market for space along the PA I-78/I-81 corridor is in
Lehigh County, a market comprising 31.4 million sq. ft., but only a
Lehigh Valley
Q2 2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
vacancy rate of 2.0%.
PA I-78/I-81 Corridor
CBRE RESEARCH
13
Lehigh Valley Statistics

ALL PROPERTIES
2006
NUMBER OF
97
BUILDINGS
DIRECT
6.74%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.32
(SF/YR., NNN)
YTD NET
CLASS A PROPERTIES
2006
NUMBER OF
41
BUILDINGS
DIRECT
8.13%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.37
(SF/YR., NNN)
YTD NET
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
103
109
109
109
108
111
113
125
135
140
35,777,332 39,108,597 39,108,417 39,283,248 39,318,248 41,043,798 42,336,998 48,970,705 52,282,645 54,905,448
10.58%
12.97%
12.61%
8.82%
5.84%
6.41%
3.61%
2.08%
5.02%
3.69%
$4.33
$4.61
$4.06
$4.04
$3.70
$4.19
$4.11
$4.74
$4.63
$4.98
-517,871
1,479,626
-28,792
2,262,334
1,302,647
1,657,658
2,495,917
6,166,416
1,664,865
1,842,388
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
46
52
52
52
51
53
55
66
76
81
20,508,285 23,788,660 23,788,660 23,576,660 23,611,660 25,039,660 26,332,860 32,850,275 36,162,215 38,785,018
11.25%
19.42%
15.50%
8.35%
4.46%
6.19%
2.60%
1.57%
6.30%
4.25%
$4.64
$4.67
$4.16
$4.47
$4.23
$5.09
$4.26
$5.00
$4.78
$5.29
6,656
504,945
718,961
2,189,196
1,052,040
1,198,090
2,405,239
5,708,663
1,446,329
1,881,540
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
61
61
61
60
62
62
66
71
73
100,000 - 300,000 SQ. FT. PROPERTIES

2006
2007
NUMBER OF
58
61
BUILDINGS
INVENTORY (SF) 10,279,782 10,810,282
DIRECT
9.04%
13.37%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.28
$4.45
(SF/YR., NNN)
YTD NET
689,641
-209,991
ABSORPTION (SF)
300,000 - 500,000 SQ. FT. PROPERTIES
7.94%
12.01%
11.77%
13.01%
7.73%
5.47%
4.28%
4.66%
4.21%
$4.24
$3.96
$3.68
$3.61
$3.75
$4.14
$4.73
$4.80
$5.01
19,131
-611,914
-58,361
-118,353
1,290,784
350,870
690,885
829,621
312,288
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
17
17
17
17
17
18
20
24
25
6,413,209
6,413,209
6,413,209
6,413,209
6,429,286
6,922,486
7,540,286
9,141,286
9,625,089
11.37%
20.38%
15.36%
6.33%
11.69%
5.80%
5.49%
12.91%
2.75%
$4.27
$3.82
$3.87
$3.88
$4.47
$4.26
$4.91
$4.85
$5.21
1,062,503
-577,875
356,743
579,000
-329,703
843,400
605,448
835,244
791,000
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
28
31
31
31
31
32
33
39
40
42
19,678,816
21,884,926
21,884,926
22,271,757
22,406,757
23,606,757
24,406,757
29,838,164
30,588,164
32,233,664
8.33%
15.93%
10.63%
5.53%
2.34%
4.36%
2.16%
0.36%
2.81%
3.76%
$4.06
$4.74
$4.19
$4.42
$3.95
$3.95
$4.47
$4.25
-114,880
397,992
1,160,997
1,963,952
1,301,647
4,870,083
739,100
2006
2007
NUMBER OF
13
14
BUILDINGS
5,288,234
DIRECT
2.52%
13.26%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.60
$4.41
(SF/YR., NNN)
YTD NET
851,021
-193,000
ABSORPTION (SF)
2006
NUMBER OF
26
BUILDINGS
DIRECT
6.58%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.37
(SF/YR., NNN)
YTD NET
14
10,810,462 10,810,282 10,598,282 10,498,282 11,007,755 11,007,755 11,592,255 12,553,195 13,046,695
CBRE RESEARCH
842,000
696,577
NORTHEASTERN
PA OVERVIEW
FIGURE 17: NORTHEASTERN PENNSYLVANIA SUBMARKET MAP
Warehouse Distribution Locations
CBRE RESEARCH
15
FIGURE 18: INVENTORY COMPOSITION BY SIZE AND SUBMARKET

(%)
Northeastern PA has emerged as an attractive alternative to the
70
Lehigh Valley and Central PA, offering lower costs, plentiful land, and
60
qualified labor.
50
Nonetheless, it takes a back seat to the Lehigh Valley and Central
40
PA in terms of users seeking the most accessible, prime sites. A
30
significant portion of its demand remains regionally-based.
20
Our data for Northeastern PA reflects a greater share of smaller
10
0
warehouses than the other 78/81 submarkets.
100,000-300,000 SF
300,000-500,000 SF
Northeastern PA
Central PA
Over 500,000 SF
Lehigh Valley
The Northeastern PA warehouse

distribution market offers lower costs,
more plentiful land, and abundant
labor for tenants.
16
CBRE RESEARCH
Northeastern PA Statistics
ALL PROPERTIES
2006
NUMBER OF
76
BUILDINGS
DIRECT
17.50%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.96
(SF/YR., NNN)
YTD NET
263,587
ABSORPTION (SF)
CLASS A PROPERTIES
2006
NUMBER OF
26
BUILDINGS
DIRECT
27.63%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.00
(SF/YR., NNN)
YTD NET
-83,934
ABSORPTION (SF)
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
83
88
92
93
93
93
93
96
98
100
26,845,312 29,595,750 30,934,917 31,399,917 31,399,917 31,399,917 31,199,917 31,868,957 32,607,938 33,267,438
12.39%
14.53%
18.59%
20.77%
15.09%
15.14%
14.51%
13.35%
11.88%
11.07%
$4.28
$4.06
$3.74
$3.53
$3.65
$3.71
$3.71
$3.61
$3.72
$3.73
4,769,808
14,315
-236,205
-399,931
1,780,920
-32,739
136,445
716,972
1,121,344
186,675
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
33
38
42
43
43
43
43
46
46
47
14,130,717 16,911,155 18,250,322 18,715,322 18,715,322 18,715,322 18,515,322 19,184,362 19,111,186 19,510,686
16.72%
22.24%
21.29%
24.08%
17.38%
17.15%
12.51%
12.80%
12.58%
11.79%
$4.28
$4.07
$3.75
$3.41
$3.67
$3.66
$3.92
$3.78
$3.90
$3.90
4,501,934
-378,495
1,178,566
-251,206
1,254,571
42,237
693,682
307,124
-22,628
38,346
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
57
59
59
59
59
59
62
63
64
9,419,965
9,816,765
9,816,765
9,816,765
9,816,765
10.32%
18.25%
21.63%
19.92%
12.18%
11.73%
12.83%
17.46%
15.72%
$3.83
$3.55
$3.44
$3.25
$2.81
$2.75
$2.78
$3.77
$3.79
127,901
-493,894
-350,817
167,655
739,564
154,450
252,407
-363,877
196,983
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
14
16
17
17
17
17
17
17
18
5,522,435
6,464,802
6,929,802
6,929,802
6,929,802
6,929,802
6,929,802
6,912,119
7,311,619
36.39%
43.86%
46.63%
38.98%
34.04%
31.36%
24.66%
20.74%
18.98%
$4.26
$3.78
$3.42
$3.81
$4.00
$3.96
$3.60
$3.50
$3.50
-726,786
61,339
-6,423
530,265
342,406
185,845
464,565
257,598
-10,308
100,000 - 300,000 SQ. FT. PROPERTIES

2006
2007
NUMBER OF
51
55
BUILDINGS
INVENTORY (SF) 8,435,500 9,102,965
DIRECT
14.48%
10.98%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$3.73
$3.88
(SF/YR., NNN)
YTD NET
240,387
888,992
ABSORPTION (SF)
300,000 - 500,000 SQ. FT. PROPERTIES
2006
2007
NUMBER OF
13
13
BUILDINGS
5,112,435
DIRECT
20.53%
32.72%
VACANCY RATE
AVG. DIRECT
ASKING RENT
$4.18
$4.45
(SF/YR., NNN)
YTD NET
56,600
-623,214
ABSORPTION (SF)
NUMBER OF
BUILDINGS
INVENTORY (SF)
DIRECT
VACANCY RATE
AVG. DIRECT
ASKING RENT
(SF/YR., NNN)
YTD NET
ABSORPTION (SF)
9,816,765 10,485,805 10,633,696 10,893,696
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q2 2016
12
15
17
17
17
17
17
17
17
18
18
9,177,982
12,629,912
14,653,350
14,653,350
14,653,350
14,653,350
14,653,350
14,453,350
14,453,350
15,062,123
15,062,123
18.58%
5.17%
9.00%
7.66%
7.96%
0.56%
8.17%
8.31%
8.31%
3.87%
3.87%
$4.00
$4.00
$3.88
$3.92
$3.98
$4.70
$3.60
$3.60
$3.77
$3.95
$3.95
-33,400
4,504,030
613,200
196,350
-42,691
1,083,000
-1,114,709
-203,850
1,227,623
CBRE RESEARCH
17
CONSTRUCTION
OVERVIEW
18
CBRE RESEARCH
Projects Under Construction

(Summer 2016)
ADDRESS
CITY
COUNTY
SUBMARKET
SIZE
TOTAL
AVAILABLE
ASKING
RENT
OWNER
STATUS
1999 RITNER HWY
CARLISLE
CUMBERLAND
CENTRAL PA
938,828
938,828
$4.75
GOODMAN BIRTCHER
UNDER
CONSTRUCTION
5 LOGISTICS DR
CARLISLE
CUMBERLAND
CENTRAL PA
204,800
204,800
$4.75
MRP REALTY JV
INDUSTRIAL PROPERTY
TRUST, INC.
UNDER
CONSTRUCTION
45 LOGISTICS DR
CARLISLE
CUMBERLAND
CENTRAL PA
582,000
582,000
$4.85
RYAN COMMERCIAL JV
HILLWOOD INVESTMENT
PROPERTIES
UNDER
CONSTRUCTION
1495 DENNISON ST
CARLISLE
CUMBERLAND
CENTRAL PA
620,000
620,000
$4.75
HILLWOOD
INVESTMENT
PROPERTIES
UNDER
CONSTRUCTION
50 MSC DR
JONESTOWN
LEBANON
CENTRAL PA
398,250
398,250
$4.75
RIDGELINE PROPERTY
GROUP
UNDER
CONSTRUCTION
1445 EDEN RD
YORK
YORK
CENTRAL PA
754,881
754,881
YORK COUNTY
ECONOMIC ALLIANCE
UNDER
CONSTRUCTION
220 W STATE ST
LYON TWP
BERKS
LEHIGH VALLEY
133,232
EAST PENN
MANUFACTURING
COMPANY
UNDER
CONSTRUCTION
CONGDON HILL DR
ALBURTIS
LEHIGH
LEHIGH VALLEY
1,100,000
LIBERTY PROPERTY
TRUST
UNDER
CONSTRUCTION
8620 CONGDON HILL DR
ALBURTIS
LEHIGH
LEHIGH VALLEY
1,200,000
$4.95
LIBERTY PROPERTY
TRUST
UNDER
CONSTRUCTION
10
8742 CONGDON HILL DR
ALBURTIS
LEHIGH
LEHIGH VALLEY
650,000
$4.75
LIBERTY PROPERTY
TRUST
UNDER
CONSTRUCTION
11
MILL CREEK RD
ALLENTOWN
LEHIGH
LEHIGH VALLEY
1,070,000
LIBERTY PROPERTY
TRUST
UNDER
CONSTRUCTION
12
MILL CREEK RD
ALLENTOWN
LEHIGH
LEHIGH VALLEY
600,000
ULINE
UNDER
CONSTRUCTION
13
3100 ALBURTIS RD
MACUNGIE
LEHIGH
LEHIGH VALLEY
210,000
INDUSTRIAL INCOME
TRUST
UNDER
CONSTRUCTION
14
149 WILLOW BROOK RD
ALLENTOWN
LEHIGH
LEHIGH VALLEY
1,200,000
FEDEX
UNDER
CONSTRUCTION
15
4683 HANOVERVILLE RD
BETHLEHEM
NORTHAMPTON
LEHIGH VALLEY
947,500
947,500
$4.75
TRAMMELL CROW CO.

JV CLARION PARTNERS
UNDER
CONSTRUCTION
16
4779 HANOVERVILLE RD
BETHLEHEM
NORTHAMPTON
LEHIGH VALLEY
297,600
297,600
$4.95
TRAMMELL CROW CO.

JV CLARION PARTNERS
UNDER
CONSTRUCTION
17
HECKTOWN RD
EASTON
NORTHAMPTON
LEHIGH VALLEY
790,720
790,720
PLANNED
18
1611 VAN BUREN RD
EASTON
NORTHAMPTON
LEHIGH VALLEY
629,800
629,800
PLANNED
19
4200 E BRADEN BLVD
EASTON
NORTHAMPTON
LEHIGH VALLEY
475,800
475,800
20
250-300 RESEARCH DR
JENKINS TWP
LUZERNE
NORTHEASTERN PA
279,000
20,000
21
FREEPORT RD
PITTSTON TWP
LUZERNE
NORTHEASTERN PA
312,356
1,100,000
210,000
$4.75
DERMODY PROPERTIES
UNDER
CONSTRUCTION
MERICLE
UNDER
CONSTRUCTION
SCANNELL PROPERTIES
UNDER
CONSTRUCTION
CBRE RESEARCH
19
To learn more about CBRE Research, or to access additional

research reports, please visit the Global Research Gateway at:
www.cbre.com/researchgateway.
IAN ANDERSON
Director, Research & Analysis
+1 215 561 8997
ian.anderson2@cbre.com
JOSEPH GIBSON
Research Manager
+1 610 727 5922
joseph.gibson@cbre.com
LISA DENIGHT
Senior Research Analyst
+1 215 561 8932
lisa.denight@cbre.com
CBRE, INC.
Two Liberty Place
50 S. 16th Street, Suite 3000
Philadelphia, PA 19102
+1 215 561 8900
www.cbre.com/philadelphia
Licensed Real Estate Broker
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not
doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm
independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all
rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

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Pennsylvanias

FIGURE 1: THE PA I-78/I-81 INDUSTRIAL CORRIDOR

The Pennsylvania I-78/I-81 Logistics Corridor, stretching from

his report has been created to meet the increasing need

from tenants, owners, investors, developers, and other

Class A: the most prestigious warehouse distribution

interested parties for accurate data to evaluate market trends.

buildings competing for premier industrial users. These

its granularity. We have identified each property so that we

FIGURE 2: NEW CAPABILITIES TO ANALYZE DATA FOR

300,000-500,000 sq. ft.

Source: CBRE Research, Q2 2016.

FIGURE 3: THE RISE OF THE MASSIVE, MODERN DISTRIBUTION WAREHOUSE

No segment of the PA I-78/I-81 Corridor has grown as quickly as the

inventory of Class A warehouse properties sized over 500,000 sq. ft.

2016). The Central PA submarket has seen its inventory of Class A

major submarkets (Lehigh Valley and Northeastern PA) since 2006

Source: CBRE Research, Q2 2016.

FIGURE 4: LARGER WAREHOUSES ARE INCREASINGLY CHARACTERISTIC OF THIS MARKET

Due to the growth of larger warehouses, Figure 4 shows how

Source: CBRE Research, Q2 2016.

Net Absorption (Left Side)

Direct Vacancy Rate (Right Side)

Bigger and better: the construction of

FIGURE 6: RECORD ASKING RENTS AVERAGE DIRECT ASKING LEASE RATE

As a result, the average asking rent reached a new all-time high

Source: CBRE Research, Q2 2016.

FIGURE 7: PA 78/81 CORRIDOR NET ABSORPTION BY CLASS

not recorded any annual negative net absorption during the

last 10 years. The only negative absorption was limited to Class

Source: CBRE Research, Q2 2016.

FIGURE 8: NOTABLE, NEW TENANTS TO THE PA I-78/I-81 CORRIDOR

PA I-78/I-81 Industrial Corridor Statistics

100,000 - 300,000 SQ. FT. PROPERTIES

Source: CBRE Research, Q2 2016.

FIGURE 9: CENTRAL PENNSYLVANIA SUBMARKET MAP

FIGURE 10: INVENTORY COMPOSITION OF PA I-78/I-81 CORRIDOR

The Central Pennsylvania (Central PA) submarket has been the

and Northeastern PA is the Class A inventory greater than 500,000

of the corridors market indicators are heavily influenced by and

between Central PAs trends and the 78/81 corridor.

Among the counties in the Central PA submarket, Lancaster County

historically maintains the lowest vacancy rates.

Source: CBRE Research, Q2 2016.

In most years, demand is strongest in Central PA (in terms of absolute

experienced the bulk of the negative absorption.

The Central PA submarket comprises the

100,000 - 300,000 SQ. FT. PROPERTIES

Source: CBRE Research, Q2 2016.

21,003,051 21,151,051 21,319,257 21,319,257 21,484,549 21,503,988 21,431,530 21,690,483 21,690,483

13,819,481 14,503,801 14,570,433 14,570,433 14,570,433 14,949,205 14,949,205 15,300,160 16,550,860

FIGURE 13: LEHIGH VALLEY PENNSYLVANIA SUBMARKET MAP

FIGURE 14: CHANGE IN TOTAL INSTITUTIONAL-GRADE INVENTORY (2006 Q2 2016)

78/81 submarkets. Since 2006, its inventory of institutional grade

warehouse distribution properties grew 66% to 55 million sq. ft.

highways, the increasing scarcity of land in New Jersey, and the

trends towards expedited delivery of goods to consumers from

Source: CBRE Research, Q2 2016.

Class A: the most prestigious warehouse distribution