TCC Breaks Ground on 455,000-SF Distribution Center in Scranton

Trammell Crow Company began construction in March on its Humboldt East Trade Center, a 455,000-square-foot distribution center being built on spec at a 31-acre site at 105 Commerce Dr. in Hazleton, PA. 

Expected to deliver by year-end, the 5-Star industrial building will feature 60 loading docks and two drive-ins, rail spurs on Norfolk Southern, 36-foot clear heights, 50-foot column spacing, seven-inch floors, 2,400-amp heavy power, metal halide lighting, ESFR sprinklers and reinforced concrete construction. 

Located within the Humboldt Industrial Park, one of the area's largest parks with rail service, the property also falls within a Keystone Opportunity Zone (KOZ) which offers certain tax abatement incentives to qualified occupants. 

Originally marketed as a build-to-suit opportunity, the project is moving forward in a submarket teeming with demand. According to CoStar data, vacancies in the I-81 Corridor submarket of Luzerne County are hovering around all-time lows with next to no vacancy in distribution centers built in 2000 or later. Whether that demand can stand up to all the speculative building in the submarket remains to be seen; as of the end of the first quarter 2017, nearly 2 million square feet of warehouse and distribution space was under construction in the submarket. 

The rampant building in the area is the result of how important the I-81 Corridor has become in terms of a North American distribution hub. A future tenant would join the likes of OfficeMax, Auto Zone, Penske Logistics and Hershey Foods within the park and scores of multi-national corporations that have zeroed in on Scranton, Lehigh Valley and Harrisburg over the last several years. Quick access to interstate highways, rail yards and ports are some of the benefits to locating within the area, which allows for overnight shipping access to more than one-third of the U.S. population and parts of Canada. 

"Construction has not been as strong in Scranton as it has been in neighboring Lehigh Valley, but demand remains strong because of the ideal location and is unlikely to taper off in the near future," said Ben Atwood, an analyst with CoStar Market Analytics covering both Scranton and the Lehigh Valley. "Developers have over 90 pad sites built-out and are optimistic they'll be filled over the next few years." 

While an asking rate for the new building is being withheld at this time, institutional-grade distribution centers in the submarket are at or above $4 per square foot. The building is also available for sale, and while an asking price is also undetermined, recent comps in the area would suggest that $65-$70 per square foot is possible. Of note, the Northeast Distribution Center on Green Mountain Road, a 400,000-square-foot asset built in 2006, sold for $28.5 million ($71 pSF) in 2015 to the Abu Dhabi Investment Authority.

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