Monday, April 26, 2021

Nike Leases 1M SF Bethlehem, PA

 By Ben Atwood CoStar Analytics

One of the largest clothing companies on the planet is coming to the Lehigh Valley.

Nike has leased over 1 million square feet at 3633 Commerce Center Blvd. in the Majestic Bethlehem Center, an industrial park that was developed on top of an old Bethlehem Steel plant in Bethlehem, Pennsylvania.

The campus has become one of Lehigh’s most prominent shipping nodes, and the Fortune 100 company will soon be neighbors with QVC, Crayola and McKesson. Like Beaverton, Oregon-based Nike, these tenants were drawn to the Lehigh Valley market by its exceptional interstate access and direct routes into New York and Philadelphia.

The deal is excellent news for Lehigh, because in spite of the market’s strengths, it saw a curious downtick in industrial demand in 2020. Net absorption was below what was seen in the nearby Scranton and Berks County markets, which each saw multiple million-square-foot deals close in the past four quarters.

This cooling was especially surprising given the market’s prominence before the coronavirus pandemic and how the related shutdowns rapidly accelerated online shopping. One would anticipate this market doing extremely well, as over the past decade, Lehigh has easily been the North Atlantic Trade Corridor’s most in-demand market.

Local industrial professionals remain confident that the market will rebound but point to the cheaper rates and availability of premium space outside the valley as factors that could be siphoning away demand. With millions of square feet of speculative development on the way, Lehigh Valley finds itself in a potentially troubling spot for the first time in years.

While the sheer amount of space set to deliver might make some waves in the coming quarters, Nike’s decision to set up shop within Lehigh is a good indication that 2020 was an anomaly, not a trend. This market remains supremely positioned on the supply chain, and the growth of online shopping caused by the coronavirus will likely keep demand elevated for years.

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