For five years, the Lehigh Valley has seen a sharp shift
in the types of development.
The market is migrating from single-family detached
residential construction, the primary development type for more than 50 years,
to assisted living and apartment communities and warehouse, logistics and
commercial box-manufacturing buildings.
These trends are expected to continue in 2016, though the
length of the growth in greenfield freight-based facilities is anticipated to
level off around 2020, as key locations around critical highway and freight
rail lines will be developed.
This will cause densification of freight facilities and
open redevelopment opportunities around highway interchanges and along primary
and secondary rail-freight corridors throughout the region.
Since 2010, the Lehigh Valley has sustained between 350
and 425 new subdivision and development proposals per year. Between 150-175 of
these plans reach final approval and development each year.
It is expected the quantity of new development proposals
will remain roughly the same this year, though the locations are evolving.
More than 50 percent of new residential construction the
last year consists of apartments. This is occurring in cities and suburbs, with
the largest apartment developments in Palmer Township (306 units), downtown
Allentown (168) and Easton (110).
The apartment development trend will continue the next
decade, as real demand and need exist for new rental product in locations that
are walkable, connected to largely urban eating, shopping, event and other
recreational amenities.
The most successful market-rate apartment developments in
recent years are in the cities, as consumer preferences have shifted to the
multimodal, urban amenities model these places provide.
The region’s rental housing shortage can easily be
addressed by reuse of existing buildings coupled with targeted new construction
in communities whose development is backed by the “transportation trifecta” –
defined by equal parts walkability, bike-ability and drive-ability.
Large assisted living developments are planned and in
construction to address the silver tsunami, as the World War II, silent and
baby boom generations age.
This ties into the rapid growth in age-restricted
communities. These development types will level off the next five years as
Generations X, Y and Z are comparatively smaller in size than their parents’
and grandparents’ and the region’s birth rate remains low.
Some single-family detached housing development will
continue as residential plans, pre-economic downturn, now are being finished.
However, consumer demand for new product of this type has changed from large
3,500-plus square-foot houses to dwellings 2,500 square feet and smaller.
The resale market for existing single-family detached
housing remains very good region-wide, regardless of dwelling size.
The Valley is seeing significant growth in commercial
development.
Several segments of the commercial market are
experiencing high growth, including car-oriented facilities, which accounted
for more than 72,000 out of 99,882 square feet of proposed new commercial space
in the last year.
New office growth also is significant, in part spurred by
the Neighborhood Improvement Zone tax incentives in downtown Allentown. More
than 157,000 square feet of the 202,547 square feet of new offices proposed are
encompassed in the development of Allentown’s Three City Center, a
NIZ-designated project.
Meanwhile, the Simon Silk Mill in Easton contains more
than 20,000 square feet of new office space. Bethlehem Township is the
third-most active municipality with new office product and is the community to
watch the next several years for the addition of new Class-A office product.
New retail development accounts for fewer than 85,000
square feet of the total nonresidential market in the Lehigh Valley.
Allentown, Easton and Lower Macungie Township host the
large retail developments with the Three and Four City Center projects, Simon
Silk Mill and Indoor Farmers Market and Hamilton Crossings projects,
respectively.
It is anticipated that as more consumer products are
bought online, the demand for existing and new retail space will decline.
Redevelopment opportunities for less desirable retail
locations will increase, and it is anticipated that portions of primary retail
corridors, such as MacArthur Road, Route 248/25th Street and Lehigh Street,
among others, will evolve into mixed-use commercial-residential corridors.
The largest growth in the noncommercial sector is in
industrial development with more than 3.9 million square feet in 2014, and more
than two million square feet as of Nov. 31 last year, in planning and
development in the region.
A variety of logistics and manufacturing facilities is
proposed and distributed throughout the region’s four primary freight hubs.
Interestingly, new industrial growth is shifting from
more obvious locations, such as Palmer and Upper Macungie townships, to
adjacent communities with access to quality infrastructure.
This speaks to the build-out of available industrial land
and increased demand.
Source: LVB
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