Monday, February 11, 2019

Central PA Labor Shortage Pushes Class A Industrial Searches Toward Shenandoah Valley

by Steve Lubetkin, Globest.com
A tight labor pool in central Pennsylvania is challenging developers of logistics space to think about pushing the corridor further south into Maryland and even Virginia.

Central PA’s strong industrial demand and stagnant population growth has drained its labor pool: industrial inventory has grown 37.5% since 2008, while its working age population has grown just 5.0%, says.

In 2008, Carlisle, PA, had 58 workers per every 10,000 square feet of warehousing; that ratio has since plummeted to 43.9. Conversely, Hagerstown, MD, has 50.8 workers per 10,000 square feet of industrial warehousing, a 15.7% advantage.
As a result, requirements tied to I-81 in Central PA are looking at options farther south where occupiers can pull labor from either MD, WV, or VA while still maintaining access to New York via a one-day truck turn, the report concludes.

In response to the industrial growth, Interstate 81 is experiencing more wear and tear than ever. At the intersection of I-81 and I-70 in Hagerstown, average daily traffic counts have jumped from 59,020 to 79,202 since 2012, a 34.1% increase. Residents and industrial users recently have increased pressure on lawmakers to explore infrastructure investments for the highway.

Traversing through rural Appalachia, Interstate-81 runs just 75 miles west of I-95 and gives distributors a less congested and toll-free route to move goods up and down the East Coast.
The Lehigh Valley, outside Philadelphia, has long been established as a core industrial market due to its connectivity to New York and Washington, regional growth has pushed through Central PA and into the Mid-Atlantic’s Shenandoah Valley. This concludes that Hagerstown (MD), Martinsburg (WV), and Winchester (VA) are maturing into viable markets for tenants in need of bulk space and proximity to the region’s ports and population centers.

More than 46.5 million square feet of industrial space sits along I-81 between Hagerstown and Winchester.

With an additional 1.5 million square feet under construction, the I-81 Corridor has more industrial development underway than all of Metro DC.

The current developments are the just latest iteration of the market’s growth: since 2008, supply has grown 24.4%, driven by 7.7 million square feet of new class A inventory.

The class A development, a mix of both build-to-suit and speculative, has attracted global brands to the market. Procter & Gamble, McKesson, and Home Depot have all expanded their operations farther south along I-81.

The largest proposal to date has come from the Virginia legislature: a $2 billion-dollar plan to improve the safety and traffic flow for the 325 miles of I-81 in Virginia. I-81 is currently toll free, yet that may change to finance the investment. The current proposal would charge $50 for trucks and $25 for cars in certain sections of the highway.

Maryland is currently underway with “Phase 1” of its I-81 investment, a $100 million project to expand the Potomac River Bridge to six total lanes.

In 2018, the state submitted two applications to the US Department of Transportation for infrastructure grants to fund “Phase 2”; both were rejected, but a third application is expected to be submitted.

In September, West Virginia approved a $49 million expansion to expand a much smaller section of the highway in Martinsburg. Recently, this section of the highway has seen an increase in traffic due to Procter & Gamble’s 2.8 million square-foot manufacturing facility delivered last year.

This concludes that the region’s availability of land “will lead to further growth.”

Currently, 2,951 acres of industrial zoned land are being marketed for development or sale. Assuming coverage of .25 FAR, an additional 32 million square feet of proposed industrial space could be built out in the long run. Totaling more than 77 million square feet of industrial space if fully built out, the I-81 corridor could rival the current size of Prince George’s County and the BW Corridor combined (83.7 million square feet).
www.omegare.com

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