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LEHIGH VALLEY PLANNING Industrial sector drives what should be more growth in '17

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FILE PHOTO/WENDY SOLOMON
The region added signifi cant retail space last year, including the opening of the Hamilton Crossings shopping and lifestyle center. Included is the
Lehigh Valley's fi rst Whole Foods Market.
FILE PHOTO/WENDY SOLOMON The region added signifi cant retail space last year, including the opening of the Hamilton Crossings shopping and lifestyle center. Included is the Lehigh Valley's fi rst Whole Foods Market.

Plan submissions in the Lehigh Valley indicate that the region has experienced a gradual recovery in development activity since 2012.

And indications are the recovery will continue in 2017 – particularly in terms of industrial growth.

In the residential sector, apartment and assisted living developments have largely driven this recovery, with condominiums and townhomes emerging as key players.

This shift from single-family detached housing reflects fundamental economic, demographic and cultural trends that are transforming not only the regional housing landscape but the national housing landscape, as well.

But to be sure, the nonresidential sector has recovered quicker and fuller than the residential sector, with industrial development largely driving the recovery.

In the industrial sector, warehouse development emerged as a key player. This shift reflects the rise of e-commerce, which demands supply chains that can provide same-day or two-day delivery to the East Coast's largest population centers.

The Lehigh Valley's strategic location, high quality of life, good infrastructure and strong workforce are primary factors driving residential and commercial industrial growth.

The nonresidential sector has rebounded from the economic downturn of 2008 more quickly and more fully than residential.

The Lehigh Valley Planning Commission recorded 27 percent more nonresidential floor area approved for development in 2015 than in 2014 (5.6 million square feet compared to 4.4 million square feet), largely driven by industrial development.

In particular, the Lehigh Valley's many brownfield sites offer important redevelopment opportunities for nonresidential uses, allowing for activity in areas already served by transportation, energy and sewer and water infrastructure.

Industrial development, and logistics-related development in particular, have dominated nonresidential development in the Valley for most of the last decade.

With its easy access to New York and New Jersey, large labor force and cheap land prices, the region is an attractive location for large-scale warehouse and distribution properties.

Indeed, according to The Wall Street Journal, “no U.S. industrial market has grown as fast as the Interstate-78/Interstate-81 corridor” between 2010 and 2016.

Since the second quarter of 2010, developers have added 56 million square feet of space along this corridor, increasing the size of the market by more than 25 percent and exceeding the pace of growth in Houston, Columbus (Ohio) and California's Inland Empire.

The recent growth in industrial development is only expected to be amplified as more goods and services are bought online and greater amounts of cargo enter the ports of New York, New Jersey and Philadelphia and travel to the infrastructure hub of the Lehigh Valley.

Although warehousing and light industrial activity continues to dominate the nonresidential sector, the mix of nonresidential uses has been somewhat more balanced in recent years, reflecting new economic drivers.

Office development activity appears to have gained momentum, driven by high-profile urban infill projects such as The Waterfront and Three City Center in Allentown, as well as large-scale office campuses in adjacent suburban townships.

Although retail continues to face challenges with the increasing popularity of online shopping, recent mixed-use and power-center developments such as Hamilton Crossings in Lower Macungie Township added significant retail space in the Lehigh Valley.

Residential activity continues to reflect the challenges presented by the slow economic recovery, as well as the opportunities presented by new cultural preferences.

After several years of limited activity, growth in multifamily development continued to drive a slow recovery in residential development.

Apartment and assisted living development played a particularly important role in that recovery, while condominium development appears to be regaining strength for the first time since the financial crisis of 2007-2008.

In contrast, single-family residential development has declined dramatically since the financial crisis and has not returned to pre-recession levels.

New development plans not only reflect changes in the region's economy, but also anticipate changes in the region's physical landscape.

Land is one of our most precious resources, and land development will shape not only our quality of life but that of future generations for years to come.

Even as single-family detached housing becomes a smaller player in the mix of housing types, it remains the dominant player in the development of land in the residential sector.

Year after year, new single-family housing consumes far more land than all other housing types combined, and much of this land is open space.

As the residential sector has struggled to rebound, nonresidential development has played an increasingly important role in shaping the region's landscape.

In the nonresidential sector, industrial development has emerged as the dominant player.

Industrial development, however, is occurring on brownfield as well as greenfield sites, with Bethlehem in particular emerging as a champion of brownfield redevelopment.

Spatially, development plays out differently on the ground between Lehigh and Northampton counties.

Specifically, most land development in Northampton County has been associated with nonresidential (particularly industrial) uses, while the hot spots for residential development mostly have been in Lehigh County.

In the two counties, most new construction occurred in the townships, while most improvements occurred in the region's cities and boroughs.

These trends have continued throughout 2016 and indicate what to expect this year.

Becky Bradley is executive director of the Lehigh Valley Planning Commission, which reviews and coordinates development activity in Lehigh and Northampton counties, maintains data and develops regional plans. She can be reached at bab@lvpc.org.

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