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Photo: Getty Images/Flickr RF, License: N/A, Created: 2018:08:22 17:01:10

by Phil Yacuboski

Drive along any major interstate highway in the area and you’re likely to see warehouse space, housing anything from your favorite discount retail items to stuff you bought online.

Pennsylvania’s warehouse space is booming and experts argue it’s our location, labor pool and location (yes, we wrote that twice) that is causing it to jump faster than other places around the country.

“You see a lot of warehouse space, but it’s really incredible when you take a macro view of and learn that the I-78/I-81 corridor is a nationally important hub for construction warehousing right now,” said Lisa Denight, a senior research analyst with CBRE Global Research, a commercial real estate and investment firm, in Philadelphia. “It’s actually the fifth in the country.”

According to a CBRE study this summer, the corridor has 17 warehouses with more than 11 million square feet of warehouse space under development. FedEx Ground, which is set to open in September in the Lehigh Valley, will be the largest terminal in the U.S.

Denight believes there are few reasons why the region ranks so high.

“It has land and it has the labor,” she said, “and it has a major location. The highways get you to New York, Philadelphia and Baltimore and they are toll-free, so it’s just a great location.”

Denight said the space is mainly being used for manufacturing and warehousing.

“It’s not just e-commerce that’s growing the corridor,” said Denight, “it’s regional and national distributors and regional stores that need space as well as third-party logistics.”

Will there be a bubble? Denight said it won’t burst anytime soon.

“We also track those who are actively looking for space,” she said, “who are actively touring space for their strategy and that aggregate footprint is double what we have available.”

“This is a trend that started about 10 years ago and it’s proceeded through the whole I-81 corridor and it’s really a result of what happened along the I-95 corridor,” said John Cognetti, owner of Hinerfeld Commercial Real Estate. “Northeastern, Central and Southern Pennsylvania are really in demand.”

He said in part, it’s due to the expansion of the Panama Canal in moving goods through on larger vessels on the east coast, which has created more distribution.

Cognetti said for the past five years, the Lehigh Valley has been the ‘hotspot’ because of the I-78 access to Port Elizabeth and Port Newark in New Jersey.

“We’ve had a pretty steady demand for space,” he said, namely because the Lehigh Valley is running out of space. “We do have some parcels of land that are readily available.”

Cognetti cited the CenterPoint Business Parks in the Pittston area that have exploded in growth the past few years.

He also said the Hazleton area is also seeing similar warehouse space growth namely because of the intersection of the major interstates and access to the Pennsylvania Turnpike.

“We’re beginning to run out of land too,” he said, “but this is good.”

Cognetti said if a large company decides to move-in, he said they have the space to accommodate.

“We’ve been able to attract some companies here to buy our old industrial spaces in the valley too,” he said, “because their properties in the Bronx, Brooklyn and Newark are going through the roof. These small manufacturers have been able to come west and they’ve found a workforce that’s available, which can essentially walk to work. That’s in addition to the big boxes.”

“A lot of the same factors are driving a lot of this growth and that’s e-commerce,” said Mike Kushner, president, Omni Realty Group. Kushner, a so-called ‘real estate headhunter,’ finds warehouse space for clients in the I-81, I-78 and I-83 corridors. “That continues to change how America shops and it’s what’s driving this.”

Kushner said location is key and Pennsylvania is smack dab in the center.

“Sixty percent of the country can be served from this part of the state from a trucking standpoint,” he said. “It makes perfect sense from a logistics standpoint to be centered here.”