by Ben Atwood Costar Analytics
Earlier this week, Luzerne County officials in Pennsylvania approved a 10-year tax incentive plan for a 5.5 million-square-foot industrial park in Hazelton.
The 400-acre tract, upon which the project will be built, has sat unused for decades, as it was historically used for coal mining and landfill purposes. With the tax abatements now set, the developer, a Bethlehem-based group called Hazelton Commerce Center Holdings, plans to develop five warehouses atop the land and will be marketing the space to national e-commerce firms.
The project will cost $500 million and will showcase the level of confidence in the Scranton market and the logistics sector as a whole.
E-commerce levels have skyrocketed thanks to the coronavirus, as sheltering in place to stop the spread has fueled a surge of online shopping. This has spiked demand for logistics space across the country and this impact has been particularly strong in the Scranton market.
Through 2020, the region saw some of the state’s highest levels of industrial net absorption, which was driven almost entirely by logistics tenants. Scranton ended last year with over 4 million square feet of positive absorption, more than nearby Lehigh Valley and Harrisburg, which typically outperform Northeastern Pennsylvania markets.
What’s even more telling about this development is that an outside firm was behind the project. Because of the region’s mountainous terrain, the development of large warehouses can be tricky and nearly all of the market’s major development has been done by Mericle, a local firm specializing in logistics facilities.
The arrival of an out-of-market developer such as Hazelton Commerce Center Holdings indicates that even with the development barriers, demand is anticipated to be strong enough to make the project worthwhile.
International manufacturers have been scouting out the Scranton region, and Hazelton in particular, for some time. Their interest in the region stems from its labor pool and logistics capabilities.
More warehouses could help bring in more manufacturers and strengthen a market that has struggled for generations to overcome the decline of manufacturing and coal.
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