Lehigh Valley Commercial Market Heating Up
The urban/suburban conflict over Allentown’s downtown Neighborhood Improvement Zone tax district has dominated recent discussions in the Lehigh Valley’s commercial real estate circle, as suburban property owners wonder how they’ll compete with the low center-city rents it makes possible.
In the meantime, the region’s industrial, retail and office real estate markets have been gradually improving, with vacancy rates in retail and industrial properties in the single digits, according to presenters at the Greater Lehigh Valley Chamber of Commerce’s Commercial Real Estate Outlook event Thursday.
“The office market has some recent recovery in rental rates, but a stubbornly high vacancy factor for a few years,” said Doug Frederick, owner of The Frederick Group. “Although currently trending in the right direction, we are still experiencing double-digit vacancy rates.”
Office vacancy rates, which were as high as 14 percent midway through 2010, are now closer to 11 percent, according to statistics provided by the Lehigh Valley Economic Development Corp. But that means 1.6 million square feet of office space remains empty.
Still, a series of recent commercial real estate deals suggests a healthy market, Frederick said, from the $200 million in commercial and office development proposed in downtown Allentown to the recent sale of Tek Park in Breinigsville
for $50 million.
Statistics provided by the Lehigh Valley Economic Development Corp. show retail faring the best. Rental rates increased in the first quarter of 2012, but still haven’t recovered to historic highs achieved in the first quarter of 2008, continuing a trend that began in the fourth quarter of 2010.