Lehigh Valley office vacancy rate high, but that could end

While the commercial office space real estate market remains challenging, John Susanin, senior managing director for Colliers, said there has been a bit of an uptick in activity, which he attributes to companies “rightsizing” their office space. 

He said that the Lehigh Valley’s vacancy rate did experience a notable increase, rising from 19.6% to 21.4% during the second quarter of the year.  

However, one of the significant office deals in the region was an example of that rightsizing.  

PPL Corp. leased four floors at Two City Center, just down the street from its long-time corporate headquarters on Hamilton Street, which it is vacating.  

The building they are leaving, the iconic PPL Tower has been put up for sale and is likely to be considered for redevelopment into apartments.  

Similarly, there are plans for the 254,785-square-foot Grand Plaza at 835 W. Hamilton to undergo conversion into a mixed-use property consisting of apartments and retail spaces, with a few remaining floors dedicated to office use.  

This transition from a purely office-oriented property to a mixed-use development will remove substantial blocks of office vacancy from the market 

And that, he said, is where the vacancy rate will be impacted. 

“There is a continued demand for Class A office space, but there is no new construction planned,” he said. “Because of that there will be a slow and steady absorption over the next several years.” 

He said that while the vacating of office space during and after the COVID-19 pandemic was a factor in the stoppage of construction of new office projects, it wasn’t the main one. 

While residential rental rates have been skyrocketing in recent years, commercial office space rents have remained stable. At the same time construction costs have risen dramatically, sometimes doubling. 

That makes it harder for developers to justify the cost of construction, when the return may not be enough to generate a profit. 

Susanin also sees a gradual return to in-office work. 

“Certainly, the market has taken a step back, but many companies are pushing to return to the office at least part time,” he said. 

While up until this point companies have been generally using the “carrot” technique to lure employees back to the office with offers of lunch or other benefits, Susanin said he is seeing that transform into more of a “stick” approach with companies demanding employees return to the office “or else.” 

In the long term he said the result will be a lowering of the commercial office vacancy rate. 

Lehigh Valley office vacancy rate up

The commercial office vacancy rate in the Lehigh Valley was on the rise at the end of 2022. 

According to a report from the commercial real estate firm, Colliers’ Philadelphia office, in the Lehigh Valley the office vacancy rate rose from 16.6% to 18.1% in the fourth quarter of the year. 

The firm said the addition of the new building at The Waterfront in Allentown was the main reason for the vacancy rate increase.  

Overall, leasing activity remains limited in the area.  

Colliers said the most notable transaction was Shift4 Payment’s deal for 74,000 square feet of Dun & Bradstreet sublease in Stabler Corporate Center.  

Shift4 will be moving and expanding from Lehigh Valley Executive Campus.  

With the shift to remote and hybrid work, companies have reevaluated the need for large, back-office operations.  

For example, Aetna shut its call center in an office building at the Lehigh Shopping Center.  

Although still utilizing the building, Guardian Life is offering its full 281,745-square-foot building for sublease. 

Compared to the rest of the Greater Philadelphia Market region that the report detailed, the overall regional vacancy increased from 16.5% to 16.9% in the fourth quarter, lower than the Lehigh Valley rate. 

The region as a whole had an 855,480-square-foot occupancy loss for the year. while significant, it was not as severe as the 2020 and 2021 annual totals. 

Commercial real estate market pulling back to more manageable levels

Continued high construction costs and rising interest rates have had an impact on what has been a red-hot commercial real estate market in Eastern Pennsylvania. 

But Mark Chubb, senior managing director for Colliers, said that’s no reason to panic. In fact, he said the slight slowdown in new construction and the minor reduction in tenants seeking space, should mean a more balanced and manageable market. 

It is, however, remarkable, he said. 

“It’s obviously an unprecedented time,” Chubb said. “A lot of things have changed very quickly in a very short period of time.” 

He said the commercial real estate investment market has faced “unprecedented headwinds” over the past 90 to 120 days. 

He said expenses have had a significant impact on the value of land for speculative construction with developers having to underwrite higher rate terms. 

“Most of the cost equations are fixed in development. Land is the big variable,” he said. 

Land prices have dropped significantly, down about 30% to 40%  over the last few months depending on the region. 

“It’s still at historic highs, but a lot lower compared to where we were 12 months ago,” he said. 

The market is still strong, he said, according to Eastern Pennsylvania and Greater Philadelphia and Southern New Jersey Industrial Big Box Research and Forecast Reports there was a 7.3% year to date market growth along the I-78/I-81 corridor with 6.3 million square feet of occupier transactions. 

He said occupier demand, meanwhile, remains relatively strong with the Lehigh Valley being the preeminent market followed by Central Pennsylvania and Northeastern Pennsylvania. 

“But it’s dropped to the activity levels we were seeing in 2018-2019, which was very strong, just not the hyperactivity we saw in 2020-2021,” he said. 

Chubb said he still sees the regional market as healthy, noting most areas are still boasting a vacancy rate of under 5% with the average vacancy rate along the I-78/I-81 corridor at 2.2%. 

In the Lehigh Valley the vacancy rate is 2.7% and is about 4% in Berks.  

The tightest market, currently, is in Central Pennsylvania where the vacancy rate is tracking closer to .8% in some areas. 

However, he said because of the volume of growth in Dauphin and surrounding counties along the I-81/I283 corridor, he expects the vacancy rate to loosen up over the next year or so. 

Despite what he said was a slight decrease in demand, from the peak of 2020-2021 market, he said there is still a healthy demand in all regions. 

“There are multiple occupies looking at each available space at any given time,” he said. 

That means rental costs will continue their upward trend. 

Currently, the average rent for industrial properties in the outlying areas of the Lehigh Valley is $9.66 per square foot. It grows to $10.12 per square foot in the Lehigh Valley’s core. 

Heading west does bring lower rent. In the Berks County region, the average rent for industrial space is $7.95 per square foot. In Central Pennsylvania the average rate is $7.46 per square foot along the I-78 corridor and $7.60 per square foot along the I-81 corridor around York County. 


IDLogistics leases space in Lehigh Valley Trade Center

Colliers Logistics & Transportation has announced the lease of 526,662 square feet at the Lehigh Valley Trade Center to IDLogistics. 

IDLogistics, headquartered in France, is an international leader in contract logistics, which began its expansion into the US in 2019.  

IDLogistics is the contract logistics provider for a global food corporation that will distribute from the new facility. 

Lehigh Valley Trade Center is a state-of-the-art distribution and fulfillment campus, under joint development of Clarion Partners and the Trammell Crow Company in Bethlehem.  

The area is home to companies such as Tesla, Stitch Fix and has the nation’s largest FedEx sort facility. 

With the conclusion of this recent lease, a third phase has begun, which will bring two new buildings of 287,455 square feet and 300,153 square feet to the 1.1 million square foot campus before the end of 2023. 

“While normalizing after the impacts of COVID-19, Eastern Pennsylvania continues to show a strong upward trend with 3PL activity remaining exceptionally active and vacancy at record lows. The confidence of multinational firms like IDLogistics in the market are strong examples that support our recent analytics,” said Mark Chubb, senior managing director for Colliers. 

Colliers signs lease to bring GOAT to the Lehigh Valley

First 33 Commerce Center at 3895 Eastgate Boulevard PHOTO/COLLLIERS –

A global online marketplace for sneakers, apparel and accessories is opening a facility in the Lehigh Valley. 

The Colliers Logistics & Transportation team for Eastern Pennsylvania said it recently leased 341,400 square feet of distribution and fulfillment space at 3895 Eastgate Boulevard in the First 33 Commerce Center in Easton to Los Angeles-based GOAT Group on behalf of First Industrial Real Estate. 

GOAT, which is an acronym for “Greatest of All Time”, serves both primary and resale markets. The e-commerce company, founded in 2015 has been growing rapidly and processed more than $2 billion in sales last year.  

The firm has 30 million members who visit its website to purchase hard-to-find and luxury products through what it described as a powerful and disruptive global technology platform. 


Dialysis center to open in Easton

DaVita Dialysis plans to open a location at the Palmer Super Center at 3725 Nicholas Street in Easton. PHOTO/SUBMITTED –

Colliers Retail said that it has signed a lease with DaVita Dialysis to open a location at the Palmer Super Center at 3725 Nicholas Street in Easton. 

The property’s landlord, Chesapeake Real Estate Group, was represented by Scott Horner of Colliers. 

DaVita will establish a new outpatient center that will offer dialysis at the site. 

In a press release the company said the spot was ideally located to serve a current gap in service to the local market, with a population of 137,184 people within just five miles of the center.  

DaVita Inc is a publicly traded healthcare company based in Denver, with a 37% share of the U.S. dialysis market.  

The firm provides its kidney dialysis services through a network of 2,816 outpatient centers across the U.S. treating more than 200,000 patients annually. 

DaVita was represented by Jamie Dietz of Cushman Wakefield and joins Redner’s Supermarket, SOLDIERFIT and FastSigns in the center. 

Bethlehem shopping center gets two new tenants

The Stefko Boulevard Shopping Center in Bethlehem. PHOTO/SUBMITTED –

The Stefko Boulevard Shopping Center in Bethlehem has two new tenants, filling longstanding vacancies at the property. 

Colliers said it has signed a lease with B Positive, a blood plasma collection site where plasma is collected to be used in life-saving medical therapies. 

The clinic will occupy 3,200 square feet at the shopping center. 

The second new tenant is a new restaurant, This is Burrito, which will occupy a 2,000-square-foot space. 

Both businesses should be opening in 2022. 

Stefko Boulevard Shopping Center sits in a dense retail corridor and is also home to Valley Farm Market, PLCB Fine Wine and Good Spirits store, Little CALI pizza, Dollar Tree, H&R Block and T-Mobile. The property owner, Regency Centers, was represented by Scott Horner of Colliers. 

Partners Personnel takes last spot in Allentown’s Plaza West Shopping Center

The Plaza West shopping center at 1602-1616 W. Allen St., Allentown. PHOTO/SUBMITTED –

A full-service staffing firm is moving into the Plaza West Shopping Center at 16th and Allen Streets in Allentown.

The addition of Partners Personnel brings the urban shopping center to full occupancy. The office will take up 1,200 square feet of retail space at the shopping center, with plans to open in December.

The lease was signed by Seth Lacey of Colliers.

Partners Personnel is a full-service staffing firm focused on placements in a variety of industries ranging from production, packaging, manufacturing, logistics and distribution as well as administrative and professional services.

The firm operates in 17 states and has more than 70 locations nationwide.

This is Partners’ first location in Pennsylvania.

The now fully leased center is also home to Quest Diagnostics, New Liberty Pharmacy, Bausch Eye Associates and Wise Financial Group.

Hamburg shopping center sold

The shopping center at 525 State St. in Hamburg. PHOTO/SUBMITTED

A Hamburg shopping center anchored by a Weis Market was recently sold by Colliers, which represented both the buyer, Sar and Co., and the seller, Linda King.

The purchase price was not disclosed, but the property was listed for sale at $2.1 million.

The one-story shopping center, which has a mix of retail including the Hamburg Coin Laundry and a Holiday Hair, was built in 1995.

Scott Horner, vice president and Derek Zerfass, senior vice president of Colliers brokered the deal.

“Notably the property had been on the market for over a year prior to listing with Colliers. We are proud of our team’s ability to deliver demand – not only did we source multiple buyers immediately, we were able to secure backup buyers to allow the team to successfully conclude the sale at the desired asking rate,” said Horner.

The shopping center is 37,840 square feet and has 138 parking spaces. It is located at 525 State St. in Hamburg

Former Emmaus Mexican restaurant being demolished for Burger King

Construction crews are demolishing the former Fiesta Ole restaurant in Emmaus. It’s being replaced by a Burger King. PHOTO/STACY WESCOE

The former Fiesta Ole restaurant at 1116 Chestnut Street in Emmaus is no more. Crews are demolishing the building of the once popular Mexican restaurant to make way for a Burger King.

The former owners of Fiesta Ole have since opened a new restaurant, Casa Catrina, in Lower Macungie Township.

Colliers said it signed a ground lease for the site with Burger King, which will be building a new building, along with a drive thru, on the property. Derek Zerfass, a senior vice president with Colliers’ retail division, represented the owner. Adam Hagerman of Bennett Williams represented the tenant.

The spot, near the intersection with Cedar Crest Boulevard, is at a busy stretch of road in Emmaus. A McDonald’s, WAWA, Santander Bank, Weis Markets and a strip center all close by.