Professional Documents
Culture Documents
3Q19 I81 78 Industrial Market
3Q19 I81 78 Industrial Market
3Q19 I81 78 Industrial Market
I-81/78 CORRIDOR - PA
INDUSTRIAL MARKET
THE I-81/78 CORRIDOR REGAINS CURRENT CONDITIONS
MOMENTUM IN THE THIRD
QUARTER
Market vacancy rose 50 basis points to 7.6% due to speculative supply
additions outpacing demand
plant into Park 100 Logistics Center in Lehigh Valley are two other Northeastern Pennsylvania
recent examples of this trend. Northeastern Pennsylvania’s negative absorption streak continued for
the third consecutive quarter, again due to national retailers closing
Central Pennsylvania realized the strongest rent growth of the three local distribution operations following bankruptcy. 556,834 square feet
Corridor submarkets with an average asking rate of $4.82/SF, a 5.0% of net occupancy losses hit the submarket over the past three months
increase year over year. Higher rates for new construction are exerting as Sears vacated the 560,000-square-foot warehouse at 1057 Hanover
upward pressure on the overall average for Central Pennsylvania, which Street and United Sporting Companies vacated the 198,400-square-foot
has also maintained the largest volume of new construction in the warehouse at 100-124 Capital Road. As a result of nearly a million
region for the past 12 months. square feet of occupancy losses to-date, vacancy has more than
doubled year over year, moving from 4.7% to 10.2%.
Lehigh Valley
The Lehigh Valley gained approximately 123,000 square feet of net Demand for space in the submarket is still healthy; year-to-date,
positive absorption in the third quarter, driven primarily by KPG occupiers have transacted large leases for new construction, such as
Logistics’ occupancy of 246,400 square feet at 2900 Brodhead Road Medline Industries, which leased the 510,510-square-foot warehouse at
upon its completion. That building was the Valley’s sole delivery this 198 Commercial Blvd last quarter, and an as-yet-undisclosed
quarter; as it delivered partially empty, vacancy rose slightly to 6.5%. ecommerce occupier, which leased over a million square feet at a
planned building in Archbald this quarter. NFI will move into a 1.1-
This quarter, a notable announcement was made regarding plans for the million-square-foot warehouse under construction in Tobyhanna by
development at Kraft Foods’ former complex in Upper Macungie year-end. Expect vacancy to remain elevated, however, as new
Township. Keurig Dr Pepper leased more than 1.5 million square feet construction will likely continue to appeal to prospective tenants more
between two buildings, one a recently-delivered, 730,080-square-foot than second-generation space left behind by Sears, Kmart and other
warehouse, and one a planned manufacturing facility. Warehousing retailers that have withdrawn from warehouses in the submarket so far
operations will commence by year-end, so between Keurig Dr Pepper's this year
occupancy of its 730,080-square-foot warehouse, and QVC’s occupancy
of its 1.6 million square foot facility at 3419 Commerce Center
Boulevard, following the completion of its expansion next quarter, the
Valley is expected to close the year on a high note.
LEASE/USER TRANSACTIONS
Tenant Building Submarket Type Square Feet
Keurig Dr Pepper 7352 Industrial Blvd Lehigh Valley Direct 730,080; 811,200
485 St. Johns Church Road Central Pennsylvania $42,500,000 $93 457,000
SUBMARKET STATISTICS
Total Under Total Qtr YTD W/D R&D/Flex Total
Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF)
Lehigh Valley 101,289,542 5,492,574 6.5 % 122,936 680,260 $5.20 $7.44 $5.39
Market Total 351,452,429 18,134,560 7.6 % 750,658 2,044,329 $4.57 $8.54 $4.68
10.0% 3%
8.0% 2%
6.0% 1%
4.0%
0%
2.0%
-1%
0.0%
Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 -2%
Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19
Source: U.S. Bureau of Labor Statistics. Local data not seasonally adjusted. Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics
PHILADELPHIA
1735 Market Street
Suite 3900
Philadelphia, PA 19103
215.561.8300
Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in
historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are available at www.ngkf.com/research
All information contained in this publication is derived from sources that are deemed to be reliable. However, Newmark Knight Frank (NKF) has not verified any such information, and the same
constitutes the statements and representations only of the source thereof, and not of NKF. Any recipient of this publication should independently verify such information and all other information that
may be material to any decision that recipient may make in response to this publication, and should consult with professionals of the recipient’s choice with regard to all aspects of that decision,
including its legal, financial, and tax aspects and implications. Any recipient of this publication may not, without the prior written approval of NGKF, distribute, disseminate, publish, transmit, copy,
broadcast, upload, download, or in any other way reproduce this publication or any of the information it contains.