RESEARCH Q3 2021

I-81/78 Corridor – Pennsylvania Industrial Market

Asking Rents Climb to an All-time High in the I-81/78 Industrial Corridor

Activity in the I-81/78 Industrial Corridor remains strong. The overall
vacancy rate increased to 8.6%, up 30 basis points from the second
quarter due to 5.5 million square feet of new speculative construction
delivered. 64.0% of that new inventory was constructed in the Lehigh
Valley. Despite the rise in vacancy since the last quarter, the overall rate
is down by 160 basis points year-over-year. Asking rental rates increased
for the eighth consecutive quarter to $5.11/SF, the highest in the
market’s history. In this quarter, absorption was recorded at 2.8 million
square feet, bringing the year-to-date total over the 10.0-million-square-
foot mark.
Current Conditions
– Average asking rents settled at $5.11/SF in the second quarter, up from
$5.04/SF the previous quarter.
– 5.7 million square feet of new construction delivered in the third
quarter.
– Overall vacancy increased to 8.6% this quarter, up 30 basis points from
the second quarter of 2021. The increase can be attributed to the 5.5
million square feet of new spec space finishing construction this
quarter.

Tenant demand in the I-81/78 Industrial Corridor is showing no signs of

Market Summary
slowing. As more new speculative construction comes online, tenants are
Current Prior Year Ago 12-Month
leasing it at a rapid pace, particularly the larger buildings. There are some Quarter Quarter Period Forecast
smaller space options under 200,000 square feet that remain available in Total Inventory (SF) 417.5M 412.8M 396.0M 
the market, but anything measuring 500,000 square feet and greater is
Vacancy Rate 8.6% 8.3% 10.2% 
either preleased or leased upon delivery. With Class A options being
Quarterly Net
absorbed so quickly, expect more new construction starts through the 2.84M 6.7M 1.3M 
Absorption (SF)
next several quarters. Rents are also expected to continue to rise as new Average Asking
$5.11 $5.04 $4.74 
product demand remains strong. Rent/SF
Under Construction
15.5M 21.7M 15.9M 
(SF)

Market Analysis
ASKING RENT AND VACANCY RATE NET ABSORPTION

$6 12% 8

$5 10% 6
Asking Rent (nnn)

Vacancy Rate

Millions (SF)

$4 8% 4

$3 6% 2

$2 4% 0

$1 2% -2
2Q16 1Q17 4Q17 3Q18 2Q19 1Q20 4Q20 3Q21 2Q16 1Q17 4Q17 3Q18 2Q19 1Q20 4Q20 3Q21
Average Asking Rent (per SF/nnn) Vacancy (%)

1
RESEARCH Q3 2021

Central Pennsylvania Northeastern Pennsylvania

Of the three submarkets which comprise the I-81/78 Industrial Corridor, Samsung made the largest lease commitment this quarter at the 1.4-
the Central PA submarket leads the way with 4.5 million square feet of million-square-foot warehouse and distribution building currently under
positive absorption year-to-date. The overall vacancy rate increased by construction on South Church Street in the Hazleton Logistics Park in
100 basis points since last quarter, rising from 6.8% to 7.8%. The increase Hazleton, Pennsylvania. The building broke ground last quarter and is
can be attributed to the 1.9 million square feet of new speculative expected to deliver second-quarter 2022. Lowe’s also leased space at
construction delivered this quarter, all of which is available for lease. 325 CenterPoint Boulevard in Jenkins Township, Pennsylvania, taking the
Asking rental rates climbed to an average of $5.09/SF, a 1.0% increase entire 744,000-square-foot building.
quarter-over-quarter, and up by 10.9% from a year ago when the rate
The overall vacancy rate declined from 11.8% last quarter to 9.5%.
was at $4.59/SF. Construction activity remains strong in Central
Vacancy is also down by 470 basis points year-over-year. Much of the
Pennsylvania, with nearly 7 million square feet under development. The
decline can be attributed to newly delivered speculative space being
largest lease this quarter was signed by Rubbermaid at the 1.2-million-
leased. Asking rental rates increased to $4.21/SF, up 4.7% from last
square-foot building located at 3419 Ritner Highway in Newville,
quarter. There is over 3.1 million square feet under construction, all of
Pennsylvania.
which is expected to deliver over the next 12 months.
Lehigh Valley
Much like the Central Pennsylvania submarket, activity remains strong in
In Conclusion
Expect construction activity across all three submarkets to remain strong
the Lehigh Valley submarket. Year-to-date absorption climbed to 4.1
heading into the end of 2021 and into 2022. Asking rents, particularly in
million square feet during the quarter. The overall vacancy rate rose to
the Lehigh Valley submarket, are expected to continue to climb over the
9.1%, up 100 basis points from the second quarter; however, the rate is
next several quarters. Taking rents over the $7.00/SF mark in Lehigh
down by 100 basis points since this time last year. Asking rental rates
Valley are becoming more apparent and it’s expected that rents could
inched further northward to $5.72/SF, a 0.5% increase since last quarter
reach $8.00/SF due to strong demand. Lehigh Valley is also land
and nearly a 1.0% gain year-over-year. Construction activity remains
constrained, so expect continued construction spillover into the
strong, with 3.7 million square feet delivered and 5.4 million square feet
Northeastern Pennsylvania submarket. As a result, asking rents are
currently being built. Notable leases inked this quarter included another
expected to increase in that submarket as well.
by Rubbermaid leasing 925,910 square feet at 8449 Congdon Hill Drive in
Alburtis, Pennsylvania, and Radial taking the recently constructed
640,305-square-foot building at 5185 Crackersport Road in Allentown,
Pennsylvania.

Select Lease Transactions

Tenant Submarket Building Type Square Feet

Samsung Northeastern PA Hazleton Logistics Park New Lease 1,412,500

Rubbermaid Central PA 3419 Ritner Highway New Lease 1,215,240

Rubbermaid Lehigh Valley 8449 Congdon Hill Drive New Lease 925,910

Lowe’s Northeastern PA 325 CenterPoint Boulevard New Lease 744,080

Radial Lehigh Valley 5185 Crackersport Boulevard New Lease 640,305

Select Sale Transactions

Buyer Submarket Building Sale Price Square Feet

Black Creek Group Central PA 125 Stonewood Road $19.1M 221K

Cabot Properties Lehigh Valley 3700 Glover Road $20.0M 181K

NEWMARK Q3 2021 I-81/78 CORRIDOR – PENNSYLVANIA INDUSTRIAL MARKET REPORT 2

RESEARCH Q3 2021

Submarket Statistics
Total Under Total Qtr YTD Warehouse R&D/Flex Total
Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF)

Central Pennsylvania 190,827,902 6,953,314 7.8% 349,249 4,489,300 $4.72 $9.22 $5.09

Lehigh Valley 144,335,246 5,446,434 9.1% 533,966 4,089,547 $5.79 $7.34 $5.72

Northeastern Pennsylvania 82,380,009 3,102,643 9.5% 1,960,210 2,390,619 $4.35 $7.26 $4.21

Market 417,543,157 15,502,391 8.6% 2,843,425 10,969,466 $4.89 $8.19 $5.11

Submarket Statistics By Type

Total Under Total Qtr YTD Total
Inventory Construction Vacancy Absorption Absorption Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF)

Total 417,543,157 15,502,391 8.6% 2,843,425 10,969,466 $5.11

Warehouse/Distribution 288,553,620 15,308,391 9.9% 3,242,909 10,985,090 $4.89

R&D/Flex 14,153,081 - 8.8% -60,216 32,827 $8.19

General Industrial 114,836,456 194,000 5.4% -339,268 -48,451 $4.97

NEWMARK Q3 2021 I-81/78 CORRIDOR – PENNSYLVANIA INDUSTRIAL MARKET REPORT 3

RESEARCH Q3 2021

Economic Conditions Employment by Industry

The Harrisburg-Carlisle metropolitan statistical area’s unemployment
HARRISBURG-CARLISLE MSA, ANNUAL AVERAGE 2021
rate increased to 5.8%, up 10 basis points from second-quarter 2021.
Despite the rise in unemployment, the rate is still down considerably
3.7% Construction
from the 10.7% reached a year ago. After 12 straight months of negative 16.5% 6.5% 21.7% Manufacturing
payroll employment, the Harrisburg-Carlisle MSA has experienced five
Trade/Transportation/Utilities
consecutive months of positive growth. Except for the financial activities
4.3% Information
sector, all major industries in the Harrisburg-Carlisle MSA have
Financial Activities
experienced improvement over the past year. 8.5%
Business & Professional
Ecommerce activity will continue to drive demand in the I-81/I-78 Education & Health
Industrial Corridor. With COVID-19 and the Delta variant still lingering, 6.1% 0.9% Leisure/Hospitality
17.1%
the migration of workers back to the office will be more staggered than Other Services
14.6%
originally projected. By early 2022, expect more employers to have Government
returned to the office and the unemployment rate for the Harrisburg-
Source: U.S. Bureau of Labor Statistics, August 2021.
Carlisle MSA to continue to decline.

Unemployment Rate Payroll Employment, Total Nonfarm

SEASONALLY ADJUSTED* NOT SEASONALLY ADJUSTED, 12-MONTH % CHANGE

16.0
15%
10%
12.0
5%
Percent (%)

0%
8.0 -5%
-10%
4.0 -15%
-20%
Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21
0.0
Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21
United States Harrisburg-Carlisle MSA
United States Harrisburg-Carlisle MSA

*Local data not seasonally adjusted

Source: U.S. Bureau of Labor Statistics, August 2021. Source: U.S. Bureau of Labor Statistics, August 2021.

Labor Force Participation Rate Employment Growth by Industry, 2021

PENNSYLVANIA HARRISBURG-CARLISLE MSA, 12-MONTH % CHANGE

64% Total Nonfarm

Construction
Manufacturing
Trade/Transportation/Utilities
Information
Financial Activities
62% Business & Professional
Education & Health
Leisure/Hospitality
Other Services
Government
-5% 0% 5% 10% 15%
60%
2016 2017 2018 2018 2019 2020 2021

Source: Federal Reserve, August 2021. Source: U.S. Bureau of Labor Statistics, August 2021.

NEWMARK Q3 2021 I-81/78 CORRIDOR – PENNSYLVANIA INDUSTRIAL MARKET REPORT 4

RESEARCH Q2 2021

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Newmark has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in historical statistics including availability, asking
rents, absorption and effective rents. Newmark Research Reports are available at ngkf.com/research.
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NEWMARK Q3 2021 I-81/78 CORRIDOR – PENNSYLVANIA INDUSTRIAL MARKET REPORT 5