Recent big-box departures mask Lehigh Valley’s underlying stability

By Brenda Nguyen CoStar Analytics

While the region's market-level indicators suggest widespread weakness, a closer look reveals that massive warehouses skew the data. Mega-distribution centers’ outsized influence has lately largely driven the Lehigh Valley’s underperforming headline figures.

Over the past year, occupiers returned or listed 3 million square feet within buildings larger than 500,000 square feet, while properties smaller than this threshold experienced negative absorption of 194,000 square feet.

Two prominent closures contributed to recent underperformance. Earlier this year, Shopify vacated and listed its 1.25 million-square-foot facility at Bridge Point 78, with eight years remaining on its lease. Last month, United Natural Foods also listed its two-building distribution campus, totaling 1.33 million square feet, for sublease after shuttering its operations over the summer.

These two exits alone stripped nearly 2.6 million square feet from occupied inventory, pushing the sublet share of available space above 45%. Meanwhile, the sublet share of availability is only 8.4% for facilities smaller than 500,000 square feet.

Facilities larger than 500,000 square feet now account for 10.1 million square feet of available space compared to 12.4 million square feet across all smaller buildings combined. Subsequently, only a handful of big-box properties represent 45% of the Valley's total industrial availability — an outsized concentration that masks underlying stability in the conventional warehouse market.

While smaller properties maintain steady occupancy, the region's excess supply of large-format buildings amid slowing economic growth will create absorption challenges for the big-box segment in the coming quarters.

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