Tuesday, December 8, 2020

Another Intriguing Development Unfolds in Reading's Industrial Market

 by By Ben Atwood CoStar Analytics

In an expensive indication of trust in the market’s dormant strength, three major Reading, Pennsylvania, industrial properties were acquired this past week by large outside investors as part of a nationwide portfolio deal involving properties owned by the Hillwood Group.

The buyers, Stock Bridge Capital and the National Pension Service of Korea, spent close to $2 billion on 23 properties totaling nearly 14.3 million square feet of warehouse and distribution space across the United States. This ranks as the third-largest industrial property sale of 2020 by value and the largest in the country since the onset of the pandemic in March

The joint venture now owns all the properties at the Hamburg Logistics Park, a 163-acre development a few miles north of Reading proper and 3 miles south of Interstate 78. These facilities are about 15 miles east of the I-78/I-476 interchange in Lehigh Valley, which allows truckers access to every major market on the northeastern shore and has made Lehigh County the epicenter of Pennsylvania logistics.

What is interesting about Reading and this sale is the market’s overhead numbers should not inspire much confidence. While leasing activity has ticked up in 2020, there’s been a surplus of construction activity within the market over the past few years.

Vacancies were well into the teens at the start of the year, and CoStar data shows 325,000 square feet, or slightly more than 15%, of the Reading industrial properties Stock Bridge Capital and the National Pension Service of Korea acquired are currently vacant.

But things might be changing. By the end of the year, Reading will have absorbed over 3.1 million square feet of industrial space, the highest figures in decades. This uptick in demand is likely due to the coronavirus spiking e-commerce levels, which has led to a surge in demand for industrial space.


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