Weaker economic headwinds cool tenant demand
Vacancy in the I-81/78 Corridor increased 230 basis points (bps) to 5.7% from the fourth quarter of 2022. E-commerce providers and retailers, which aggressively expanded during the COVID-19 pandemic, have adjusted their logistics requirements with decreased consumer demand. In addition, 29.0 million square feet (msf) of new construction delivered over the past 12 months, and those projects have taken longer to lease up. Vacancy increased across all submarket clusters. Year over year, Northeast PA’s vacancy rate grew by 150 bps to 6.8%, Lehigh Valley’s by 170 bps to 6.6% and Central PA’s by 290 bps to 4.6%.