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Lehigh Valley's logistics market falls further out of step with national trends

 By Brenda Nguyen CoStar Analytics

Pennsylvania's Lehigh Valley is emerging as a logistics outlier, with increasing availability and reduced tenant demand setting it apart from Philadelphia and national trends.

The logistics availability rate for the Lehigh Valley reached 18.5% in the third quarter of 2026, up more than 12 percentage points from roughly 6% in late 2022. The current rate is well above Philadelphia's 10.9% availability rate and the national average of 10.7%. Although availability remains elevated across many industrial markets following a historic development wave, the Lehigh Valley's supply-demand imbalance has widened faster than in most other U.S. markets.

The disconnect reflects a recent surge in speculative development, projects built without any preleasing, followed by a pullback in demand. Developers have added a substantial number of speculative warehouse projects based on expectations that pandemic-era gains in consumer spending, e-commerce and supply chain expansion would continue. Instead, logistics tenants have slowed expansion plans, consolidated operations or delayed leasing decisions, leaving an overhang of unfilled warehouse space.

Lehigh Valley logistics facilities larger than 200,000 square feet recorded roughly one million square feet of negative absorption over the past year, meaning tenants vacated more space than they occupied.

While the Lehigh Valley has struggled to fill recently delivered logistics facilities, Philadelphia's logistics availability has closely tracked the national average and trended lower in 2026.

By comparison, neighboring Scranton recorded approximately 2.4 million square feet of positive absorption in logistics facilities. The contrast suggests regional demand has not disappeared but has become more selective, with some occupiers likely favoring lower-cost markets.

The Lehigh Valley's long-term logistics advantages remain intact, including its 'one-day' geographical proximity to major consumer markets, robust multi-modal infrastructure and cost efficiencies relative to coastal hubs. However, the current glut of excess inventory and reduced demand are likely to keep the market trailing Philadelphia and national industrial trends over the coming year.

Even so, continued speculative development suggests logistics developers are positioning for stronger tenant demand to return in 2027 and 2028, rather than responding to current market conditions.

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Penn Beer Sales & Service buys its own warehouse and adjacent land in suburban Philadelphia

 By Ryan Cashion

Penn Beer Sales & Service, a Hatfield, Pennsylvania-based wholesale distributor of alcoholic beverages, purchased the 324,796-square-foot manufacturing facility it fully occupies at 2801-2805 Township Line Road in Hatfield from Maguire Hayden Real Estate Co. for $48.5 million, or roughly $149 per square foot. The notable owner-user sale included both the industrial building and adjacent land parcels.

The industrial property was originally built in 1967, with renovations completed in 1998. Maguire Hayden had acquired the property in 2019 from S.S. Gretz Beverage for $27 million, or about $83 per square foot.

Gretz Beer Co. had sold its business operations to Penn Beer, one of the largest Anheuser-Busch wholesalers in the Northeast, while retaining the real estate until the sale to Maguire Hayden, a privately held real estate firm founded through a collaboration between Maguire Investment Management and Hayden Real Estate Investments. The firm is led by Tony Hayden, Jr. as principal and CEO.

Following the purchase, Penn Beer plans to build two additional warehouse-distribution centers on the 30-acre property. 

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Ethos breaks ground on larger of two warehouses planned near Reading, PA

By Vivian Peregrino CoStar Research

Ethos Development Group, a Pennsylvania-based industrial developer that partners with institutional investors to build warehouse and distribution facilities across the Northeast, has started construction on the first building planned in the Inner Loop Logistics Park.

Located at 181 Krick Lane in Reading, Pennsylvania, the 1,031,444-square-foot speculative industrial building is being built on a roughly 80-acre site in South Heidelberg Township along the Route 422 corridor west of Reading.

The first building, which Ethos is developing on a speculative basis without any tenant commitments, is expected to be completed by September 2027. The building will have 40-foot clear heights, 182 loading docks, four drive-in doors, and 649 auto parking spaces, along with solar-ready infrastructure and LED lighting.

A second, smaller building measuring 319,920 square feet is also planned on approximately 25 acres on the east side of Krick Lane, directly across from the first building, which would bring the park's total to roughly 1.35 million square feet. The logistics park is LERTA-approved, offering tenants up to 10 years of tax savings, and is situated along the Inner Loop connecting Interstate 83, Interstate 76, and Interstate 78/81.

Ethos Development was co-founded by Matt Nunn and Jim Groch. Nunn, who serves as president, previously spent nearly a decade as a partner at Trammell Crow Company, the nation's largest developer. Groch, Ethos' executive chairman, previously held senior executive roles at CBRE Group, including chief financial officer, global group president, and chief investment officer, from 2009 to 2020. The firm focuses on developing industrial distribution projects in high-barrier-to-entry markets throughout the Northeast.

The Reading-area industrial market encompasses roughly 66 million square feet of inventory. South Heidelberg Township has become a focal point for large-scale logistics development, with the Ethos project being one of the largest new additions to the submarket.

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