When CBRE in January examined the 100 largest leases of 2023 in the nation, it reported a softening of demand for industrial and logistics space nationally and a drop in “mega industrial leases” of 1 million sq. ft. or more from a record 63 in 2022 to 43 in 2023.
Don’t talk to the Lehigh Valley about soft, however. When measured by number of industrial leases among the largest 100 in the nation last year, the Pennsylvania I-78/81 Corridor accounted for 17 transactions among them totaling 16.3 million sq. ft. of space — more than the shares of Chicago and Memphis in those largest 100 combined.
Photo of Pennsylvania Turnpike over the Lehigh River by Alex Potemkin: Getty Images
That level of demand — as the rings of logistics services move out from East Coast hubs in order to move more efficiently — in part explains the rise of Allentown-Bethlehem-Easton, Pennsylvania, from No. 2 last year to this year’s No. 1 Tier-2 Top Metro, with 50 projects. Second place goes to Dayton-Kettering, Ohio, with 47 projects (up from No. 5 last year), followed by No. 3 Omaha-Council Bluffs, Nebraska-Iowa, with 38 projects and a tie between Greenville-Anderson-Mauldin, South Carolina, and newcomer Reno, Nevada, for fourth place with 35 projects apiece. They are tops among the 170 metro areas with populations between 200,000 and 1 million people.
The rest of the Top 10 take a swing through the South with Greater Charleston, South Carolina; Baton Rouge, Louisiana; and Greensboro-High Point, North Carolina, at Nos. 6, 7 and 8, followed by another Pennsylvania region, Scranton–Wilkes-Barre–Hazleton, at No. 9 and a tie for 10th among Lexington-Fayette, Kentucky; New Haven-Milford, Connecticut, and Worcester, Massachusetts-Connecticut, with 25 projects apiece. The differential between sixth place and 10th place was only one project for each step down.
A review of the project data shows a list of distribution centers as long as your arm in the Lehigh Valley: an $80 million, 30-job expansion in Bethlehem from United States Cold Storage; a 921,000-sq.-ft. facility from ID Logistics US in Carbon; a 50-job location from A. Duie Pyle in Allentown; and a $5 million, 102,000-sq.-ft. operation from Sunshine Trucking in Northampton County among them. In all, 24 of the region’s 50 qualifying projects last year were distribution operations.
But don’t think the area’s a one-trick pony. With GDP of more than $50 billion, the Lehigh Valley’s brand names include Crayola, B. Braun Medical, Mack Trucks and Martin Guitars, among others. Among the area highlights offered up by Lehigh Valley Economic Development Corporation:
- The metro region’s 2022 population of 871,229 included an estimated 7,300 who moved to the region during the pandemic. Analysis by LVEDC’s Paul Muschick found Lehigh County ranked in the top 4% of all U.S. counties for net international migration (with a gain of 2,584 people moving there between April 2020 and July 2022) and Northampton County was in the top 4% of all U.S. counties in net domestic migration from other places in Pennsylvania and other states with a net gain of 6,941 people.
- Lehigh and Northampton counties are among the 27 counties out of Pennsylvania’s 67 counties that have grown in population over the last two years, while the overall region (which also includes Carbon County in Pennsylvania and Warren County in New Jersey) has welcomed 12,100 new jobs over the past five years. Major recent investments in the area have come from B. Braun Medical ($200 million, employing 2,000); Evonik ($700 million, creating 50 new jobs) and Schless Bottles ($7.5 million, nearly 100 jobs).
- Located 90 minutes from Philadelphia, New York City or the Port of Bayonne in New Jersey, the area’s 11 colleges and universities and three career and technical schools produce more than 11,000 graduates annually.
Lehigh Valley’s employment numbers have surpassed pre-pandemic levels, especially in manufacturing, where employment tops 36,000. Stakeholders recently followed the German model in forming a new apprenticeship program called iTEC, which stands for Industrial Training and Education Consortium of the Lehigh Valley. The first programs are in mechatronics and industrial manufacturing technician career paths. In addition to leadership from leading employers such as B. Braun, OraSure Technologies, Lutron Electronics and Heidelberg Materials, the program is supported not only by LVEDC but also by certifications, educational outreach and other operations from the German American Chamber of Commerce.
“>Photo courtesy Experience Sioux Falls
The German and Moravian heritage of the place goes back a ways. Look no further than C. F. Martin & Co., the Nazareth-based maker of those coveted Martin guitars. In November, a few months after The Wall Street Journal reported that the iconic guitar maker was battling with the area’s fulfillment centers to attract workers, the company marked the 190th anniversary of its founding in 1833 by Christian Frederick Martin by introducing a limited-edition D-19 model.
“One hundred and ninety years ago, on November 6th, my great, great, great grandfather and grandmother and their two children arrived in New York City from Germany,” said Executive Chairman C. F. Martin IV in a release. “They initially settled at 196 Hudson Street and opened the first Martin Guitar workshop in the New World.” Reintroducing a 1976 model was the chosen way to celebrate this latest anniversary. “This model also embraces sustainability by utilizing cosmetically challenged Adirondack spruce tops that we have had in inventory for a while,” Martin said. “We sent them through our Mimaki printer to achieve a figured mahogany look for the top. Hope you like it.”
If employers keep liking like the Lehigh Valley as much as guitarists like Martins, the music may never stop.
Sioux Falls Rises
Like most of the Top 10 Tier-2 Metros in projects per capita this year, Sioux Falls, South Dakota has come seemingly from out of nowhere. The region’s 23 projects give it the No. 1 ranking with a ratio that beats out those of Reno, the Lehigh Valley, Dayton-Kettering and Laredo, Texas.
The next five aren’t slouches: Savannah, Georgia, places sixth, followed by Lexington-Fayette, Kentucky; Wilmington, North Carolina; Scranton–Wilkes-Barre–Hazleton; and Longview, Texas.
Greater Sioux Falls makes its state greater too: The metro area hosted more than half of the projects that catapulted South Dakota to the per-capita Governor’s Cup trophy celebrated elsewhere in this issue.
Projects include a 40,000-sq.-ft. expansion by Dakota Digital; a $45 million investment at Smithfield Foods’ pork processing plant; a 50-job commitment by global health care company Owens & Minor to an integrated service center it will share with Avera Health; a $20.4 million service center expansion by Xcel Energy; an investment of $5.1 million by Dakota Fluid Power; a $30 million corporate headquarters, fabrication facility and maintenance facility from Maguire Iron; a $6 million office and warehouse investment from vintage video game reseller CaveGamers; and a $25 million investment by FedEx Freight at a 43-acre site in Foundation Park, which since its founding in 2015 has sold nearly 500 of its more than 950 acres to companies creating thousands of jobs and millions of dollars in new tax base.
The 2023 annual report released in November by Sioux Falls Development Foundation reported 290,000 residents in a region that’s growing by more than 5,000 annually. Among new developments in the community are continuing outreach and support from Startup Sioux Falls from its downtown location, a $10 million health sciences clinical simulation center at Southeast Technical College and the first building in the planned 80-acre USD Discovery District at the University of South Dakota.
Sioux Falls Development Foundation also is partnering with the Governor’s Office of Economic Development on the “Freedom Works Here” workforce recruitment campaign. To date, the Development Foundation says it has received contact information for over 5,000 individuals who have expressed interest in relocating to South Dakota.
