Construction Levels Elevated
Over 18 MSF of new projects broke ground in 2017, much of which was concentrated in the second half of the year and set to deliver in 2018. Over the course of the market cycle, annual construction starts have typically grown steadily year-to-year, except for 2016, when the amount of construction starts (13.4 MSF) held steady from the previous year (13.3 MSF). Projected development starts in 2018 are expected to taper from last year’s high to 14.5 MSF.
Current Development Trends Large-Format & In Less Centralized Locations
Market-wide, ten new speculative availabilities over 800,000 SF are either existing or under construction. Seven of those developments are in the Lehigh Valley submarket, encompassing Berks, Lehigh & Northampton counties, and Berks county claims four of those seven projects. The more rural Berks county has nearly equal frontage along the toll-free I-78 corridor as Lehigh & Northampton counties combined, but contained only 12% of the submarket’s existing inventory at year-end 2017.
Above Average Market Absorption Projected For 2018
A strong occupier pipeline, with a notable number of requirements searching for space above 700,000 SF, will keep the surge of soon-delivering supply in check. More importantly, of the 16.5 MSF of new inventory under construction, more than 25% is build-to-suit or pre-leased speculative product.