Consistent Momentum

Key Trends

Occupier Transaction Volume on Track to Hit Cycle High
At the end of Q2, year-to-date new occupier transactions amounted to 7.9 MSF, a small increase over the 7.6 MSF recorded by mid-year 2016. With several tenant requirements expected to land in Q3, the second half of 2017 is likely to be as busy as the first. Current leasing momentum puts the year end forecast at 17.7 MSF of new deals, a continuation of last year’s robust deal volume (15.8 MSF in annual transactions).

After Blockbuster Year for Lehigh Valley, Growth Moderates
The Lehigh Valley was the most active submarket in 2016, clocking an impressive 13.9% market growth rate in 2016. Halfway through 2017, the submarket’s growth rate stands at 0.2%. Limited supply rather than diminished demand is attributable to the low year-to-date growth. Absorption, occupier transaction volume, and market growth numbers are down year over year, due to deliveries not keeping pace with the high level of demand. Wide variation in market growth from year to year is far from unusual in the Valley as the dynamic growth rate during the current cycle has developers struggling to keep pace with tenant activity.

Central PA & Northeast PA Pick Up Slack from Lehigh
After lagging behind the Lehigh Valley last year, Central PA occupier transaction volume in the first half of 2017 is significantly above the submarket’s five-year average. Central PA deals currently account for 65% of all YTD transactions in Eastern PA. In this market cycle, Central PA and Lehigh Valley have tended to alternate the claim to the largest percentage of transaction volume among the submarkets, roughly every year or so. Transaction volume has also picked up significantly in Northeast PA. YTD transactions in the northernmost submarket, 2 MSF, already top year-end totals for 2011 – 2015.