Listen to this articleA commercial real estate update from McGowan Corporate Real Estate Advisors is showing that new tariffs are increasing construction and supply chain costs, causing tenants to delay leasing decisions and reassess expansion plans.
The report did say that despite headwinds, reshoring initiatives are fueling new manufacturing investments and boosting demand for industrial space in inland and secondary U.S. markets.
The dynamics are having an impact on industrial rents in the Lehigh Valley.
McGowan said Lehigh Valley’s industrial rents remain highly competitive, because of its prime location and lower prices compared to nearby port markets.
The average rent for industrial properties in the Lehigh Valley market is $8.90, while 4- and 5-Star facilities can reach between $11 and $12 per square foot, which is well below Northern Jersey’s $15.70 per square foot, New York’s $19.80 per square foot, and Philadelphia’s $11.40 per square foot.
According to the report smaller properties are even higher, with recent flex leases exceeding $12.50 per square foot triple-net.
The latest wave of tariffs is adding pressure, McGowan said they are raising costs for occupiers and slowing leasing decisions just as investment sales volumes collapse 70% year-over-year to $210 million.
Because of that, at least in the short term, landlords may lean more on concessions to maintain occupancy, but with new supply increasingly constrained by regulation, Lehigh Valley is well-positioned to tighten inventor again, which should set the stage for renewed rent gains in the future.
