"It is anticipated that as the economy recovers and existing inventory is absorbed, asking and taking rental rates will increase in the latter part of 2003 to approximately $4 per sf," Wolf predicts. "We expect tenants in the areas of fulfillment and third-party logistics to lease space, and as the economy continues to gradually strengthen light manufacturing and assembly tenants should re-emerge."
The 37-million-sf Lehigh Valley industrial market now is plagued by an 11.2% vacancy rate, Wolf notes. "Asking rental rates for modern warehouse and distribution space in the Lehigh Valley have declined from $4.50 per sf in 2001 to $4.25 per sf in 2002," he notes. "Taking, or effective, rates also fell, from $3.85 per sf in 2001 to $3.65 per sf in 2002."
Tenants are looking for access, including rail service, Wolf observes. Ceiling heights, short-term leases, flexibility and immediate occupancy also are on most of their wish lists, he adds. Besides worrying about vacancies, owners want to see good credit from prospective tenants and security deposits, Wolf says.
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