Philadelphia [September 28, 2016] - Colliers International Group Inc. (Nasdaq: CIGI) (TSX: CIG) recently released its Industrial Logistics & Transportation Solutions 2016 Mid-Year Outlook – Big-Box Market Report, examining influencing factors in six major North American distribution markets for industrial properties 300,000 sq. ft. or larger. Colliers’ analysis reveals that supply chain modernization—which is still in its infancy—and positive e-commerce sector growth continue to bolster the U.S. industrial real estate market, particularly big-box, which is experiencing a record number of tenants in the market.
The Eastern Pennsylvania Big-Box/Logistics Market posted strong gains across most submarkets. Led by the Lehigh Valley/I-78 Submarket, where overall growth topped 8% year to date, which contributed significantly to overall market growth of over 3%. This level of growth would rank the Eastern PA Region as one of the most rapidly growing markets in the US.
- Significant market growth - overall market growth in the Eastern PA “big-box” markets was over 3% in the first half of 2016. This was led by the Lehigh Valley, which posted over 8% market growth.
- Record construction deliveries - new deliveries topped 6.7 MSF and are on track to total over 15 MSF by year end.
- Strong occupier activity – by mid-year there was over 6 MSF of new occupier transactions. The top five occupier transactions, included Starbucks (1.2 MSF) in Manchester PA; An undisclosed user in Easton (1.1 MSF); Hudson Bay (617,000 SF) in Pottsville; Cal Cartage (538,650 SF) in Bethlehem and Samsung (750,000 SF) in Bethel.
- Substantial rent growth – especially in the Lehigh Valley, where achievable market rents now top $5 per square foot.
- Increased supply – primarily weighted by Central Pennsylvania/I-81 South, overall supply increased slightly, leading to a 38 basis point increase in vacancy rate from year end 2015.
- Growing activity pipeline – new occupier activity and anticipated deals should result in a higher volume of transactions during the second half of 2016.
Key market highlights for New Jersey/Lehigh Valley/Eastern Pennsylvania include:
- Demand from logistics and e-commerce users has propelled this market to emerge as one of the most robust in the country. Big-box leasing activity has more than doubled between Q2 2015 and Q2 2016. During the first half of 2016, a total of 18.4 MSF was leased, the most for a core North American market.
The full Colliers International Industrial Logistics & Transportation Solutions 2016 Mid-Year Outlook – Big-Box Market Report is available for download.