Northeastern Pennsylvania -
Northeastern Pennsylvania and its chief cities of Scranton, Wilkes-Barre, and Hazleton have long been synonymous with industry in America, first as a mining and rail hub and later as
a center of manufacturing activity. As such it should be no surprise that as the industrial sector has become a runaway success story over the past decade, the region has emerged as one of the hottest commercial real estate markets in the nation – the only curiosity is that it took so long for the boom
to arrive.
Industrial’s surge has been propelled by large warehouse users seeking ideal locations and capable workforces. Northeastern Pennsylvania stands at a crossroads of interstates – including I-81, I-80, I-84, and the Northeast Extension of the Pennsylvania Turnpike – that lead to the Northeast’s major metropolitan areas. All told, an operation based in Northeastern Pennsylvania can reach nearly one-third of the U.S. population and half of the Canadian population within an 11-hour drive, the permissible daily drive time for commercial truck drivers. Along with that, the pedigree of skilled labor that established the region as an industrial powerhouse has endured.
“The intrinsic traits of the region – its location and workforce, certainly keep NEPA in the discussion for any warehouse site selection. What truly sets us apart and is often the deciding factor when firms opt for the area is the lower operating costs that are realized,” according to David Weaver, SIOR, Vice President of NAI Mertz of PA. “Rents, while rising due to sustained high demand, are still considerably lower than surrounding markets, such as Northern New Jersey. Combined with the region’s favorable cost of living and pro-business climate, the economic argument for NEPA is quite solid.”
The unprecedented demand for distribution space has precipitated unprecedented development throughout the region, with projects under construction or planned totaling in the tens of millions of square feet. The area is still in possession of an abundance of developable land and, consistent with the area’s cost-effective nature, land is cheaper to purchase and construction expenses are comparatively lower. Development continues at a brisk pace in the preeminent industrial parks, including Mericle’s CenterPoint in Pittston, Humboldt Industrial Park in Hazleton, and Valley View Business Park in Jessup, but the push for more space has spread into all surrounding counties with largescale distribution and manufacturing facilities popping up all along the I-80 and I-81 corridors in Carbon, Schuylkill, and Monroe Counties.
This era of robust industrial growth has led to some notable accomplishments for the region. In its most recent annual report, the Commonwealth’s Governor’s Action Team (GAT) showed that Northeastern Pennsylvania led the state both in job creation as a whole and specifically in the manufacturing industry and regional and national headquarters sectors.
“Northeast Pennsylvania has been quietly re-emerging as a major player on the industrial scene for a while now. But the momentum has really accelerated over the past few years,” said Chris Matus, CCIM, SIOR, PMP, Director with NAI Mertz of PA. “We’re of course on the radar for all prospective warehouse and manufacturing users, but beyond that, the strength of industrial assets in the area has caught the eye of investors. The past two years have seen an exponential jump in industrial investment sales.”
Notable recent sale transactions include the portfolio sale of two triple net leased buildings totaling 2,000,000+ s/f in Hanover Township and a 1,000,000+ s/f facility in Valley View Business Park leased to Amazon. On the leasing side, the roster of national names with a presence in the area continues to grow. Notable recent leasing deals include a 1.4 million s/f lease by Samsung in Hazleton; a 1.3 million s/f by Big Lots in Tremont, Schuylkill County; and a one million s/f lease by Bed Bath & Beyond in Frackville, Schuylkill County.
It may have taken a bit of time for the corporate sector to recall that the communities of Northeastern Pennsylvania have a proud industrial heritage to go along with a desirable location, but now that the region is back in the spotlight, its industrial real estate market has experienced rapid, substantial growth. Unlike the anthracite that first brought the region to prominence, the resources driving the latest industrial boom in Northeast Pennsylvania are not exhaustible.
