Leasing activity is expected to remain "at moderate levels," with rents remaining flat or increasing slightly in the third quarter, according to William Wolf, managing director of Insignia/ESG's Lehigh Valley office. Call centers and operations centers could be hot properties this year, he adds.
"During 2002 in the Lehigh Valley, office availability was virtually unchanged from 2001," Wolf notes. "While leasing activity was below the levels we experienced in 1999 through 2001, when compared to most markets around the country it was still at a relatively healthy level."
Meanwhile, rental rates have remained firm, Wolf notes. "Asking rental rates for class-A space remain at $23 per sf," he reports. "However, the difference between asking and taking rental rates did decline from $21.50 per sf in 2001 to $19 per sf in 2002, based upon a full-service, five-year lease."
As for now, owners are looking to renew tenants early, while tenants are digging in their heels as a result of soft market conditions, Wolf says. And while creditworthiness is high on an owner's priority list, tenants are looking to get into space with minimal security deposits as well as having early termination options in their leases, he adds.
"Owners are concerned about the rising operating expenses, in particular real estate taxes and insurance," Wolf adds. "It's feared that the Lehigh Valley will lose its attractiveness as a lower cost alternative to neighboring markets if operating costs continue to increase."
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