Lehigh Valley grapples with record-high industrial vacancy

By Brenda Nguyen CoStar Analytics

The Lehigh Valley industrial sector — long regarded as one of Pennsylvania’s strongest logistics hubs — is experiencing its steepest downturn in more than a decade. Owners of recently completed warehouses are faced with shrinking tenant demand, while a wave of new supply has pushed vacancy to the highest level since 2010.

As of the third quarter, net annual absorption, or the net change in occupancy, was negative 2.7 million square feet, extending last year's occupancy losses. Meanwhile, 1.5 million square feet of new warehouse space was added to the market inventory, driving the vacancy rate up 220 basis points year over year to 8.5%. That average vacancy level exceeds the national average of 7.4% and is expected to climb further before the end of the year.

The amount of available sublease space also increased, with sublease space accounting for 16% of the 21.4 million square feet of available space in the market. The recent closures of several big-box facilities contributed to the recent uptick in sublease availability.

In early 2025, discount retailer Big Lots, which filed for bankruptcy in late 2024, closed its 1.3 million-square-foot distribution center in Tremont, delivering a significant blow to net absorption. Over the summer, Home Depot vacated its 822,500-square-foot facility at The Crossings North in Breinigsville and listed the entire building for sublease with three years remaining on its lease.

Shopify also reduced its footprint, offering 300,000 square feet of its 1.25-million-square-foot facility at Bridge Point 78 for sublease in March.

While continued industrial leasing provided some relief, Lehigh Valley’s industrial market will likely face additional challenges through the end of 2025. The near-term outlook calls for vacancy to continue to increase as demand wavers amid tariff concerns and broader economic uncertainty.

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