With just a few weeks left in the year, it appears increasingly likely that Scranton will be crowned the 2020 Queen of Pennsylvania logistics.
Her ascension to the throne is somewhat surprising. There were some troublesome signs within the market at the onset of the pandemic. And for years, Northeast Pennsylvania has played second fiddle to Lehigh Valley, which offers better access to New York and Philadelphia.
But CoStar data shows industrial net absorption, the difference between move-ins and move-outs, in Scranton totaled nearly 4 million square feet over the past 12 months, more than every other market contained within the North Atlantic trade corridor.
This region runs from Scranton down to Hagerstown, Maryland, and over the past decade, nearly every serious player in e-commerce has moved into at least one of its small markets. That’s because from them, every major city along the northeastern coast can be reached within hours.
Even with this strong demand, it appeared Scranton was possibly in for some short-term pain the second quarter.
No one had a clue how leasing any commercial property type would function at the onset of the pandemic, and Scranton had millions of square feet of speculative industrial space nearing completion. There was also a concentration of tenants that appeared to be at risk of downsizing within the market.
This could’ve compounded the disruption the new supply would create, and with a surplus of projects set to come online in nearby Lehigh Valley, the competition for new tenants looked like it would be fierce.
Instead, local demand spiked.
The exposed tenants have not downsized their local presence, and most of Scranton’s industrial tenants remain in place. Additionally, major leases were signed by Geodis, Kane Logistics and Lowe’s. Even with millions of square feet in speculative space arriving, the market’s overhead vacancies actually trended down over the second half of the year.
This bodes well for Scranton’s future. There’s still about 2.5 million square feet of logistics space under construction; much of it is speculative. Given the market easily filled this amount of space throughout this turbulent year, it looks likely that demand will keep up with the new supply through 2021.
Experience with creative development might be a plus in the near future as developers look to rapidly adapt to the e-commerce boom. Empty shopping malls, vacated department stores and even repurposed mines are being sought after across the state for redevelopment and expansion.
There are more than a few high-vacancy shopping malls in Scranton and quite a bit of empty shopping centers, too. It probably won’t come to this, but there’s plenty of abandoned coal mines here as well.
Scranton’s reign might be brief; there’s a lot of space in Lehigh that could lease any day. Regardless, her future looks quite promising.
For more information about Scranton office space, Scranton retail space, and Scranton industrial space or other Scranton commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Lee Fein (lee.fein@wolfcre.com) at Wolf Commercial Real Estate, a leading Scranton commercial real estate broker that specializes in Scranton office space, Scranton retail space, and Scranton industrial space.
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