A Growing Region
The Lehigh Valley has been adding more than 4,000 new residents a year for seven decades. All those people need more places to live, work, shop and recreate. Here’s a look at how investors and developers have been building to handle all that new demand.
Residential Trends – Apartments Dominate the New Economy
Over the past decade, apartment development has surged in the Lehigh Valley, surpassing single-family detached housing as the largest category of approved residential development. During the same period, the amount of approved single-family detached, semidetached and rowhome units has remained well below pre-recession levels. These development trends reflect a shift from homeownership to renting in the wake of the 2008 housing crash. From 2012 to 2016, the region lost nearly 5,000 homeowners, while gaining more than 6,500 renters, as more buyers show a preference for more urban lifestyles.
For the near term, the LVPC projects that apartment development will remain strong, particularly as residential development in the region’s downtowns and suburbs gain steam. While development of suburban single-family detached housing should gradually rise again, the challenge will be to offer housing that is affordable to mid-market buyers. The need for affordable housing, coupled with the lifestyle preferences of empty-nesters and a younger generation of buyers should spur new types of residential development that combine the amenities of traditional suburbs with conveniences and connectivity of more urban living. This trend has been particularly evident in Allentown’s resurgent downtown.
Industrial – Expect More Warehouse Development
The growth in warehousing and logistics facilities continues to present opportunities for job and economic growth, while presenting challenges to infrastructure, public safety, farmland preservation, and air and stormwater impacts. The region’s large amounts of available industrially zoned land and its centralized location, combined with increased globalization, prompts the LVPC to project continued warehouse development. More than $16 million square feet of warehouse space has been approved since the start of 2016, and another nearly 12 million square feet have been proposed, but not yet approved in the past two years. That alone suggests that aggressive warehouse development will continue in the near future, although a growing Lehigh Valley labor shortage could stunt some of that growth.
Of particular concern is warehouse development proposed in areas where infrastructure, including rural roads and bridges, is not sufficient to accommodate such intensive development or the impacts of freight truck traffic. To address this challenge, municipalities will need to coordinate their zoning among themselves to direct these uses to the most appropriate locations. Additionally, the region should continue to develop a diversified economic development strategy that balances opportunities for growth with the quality of life that distinguishes the Lehigh Valley.
Office – New Construction Driven by Tax Policy
Since the mid-20th century, the majority of the Lehigh Valley’s growth, including office and employment centers, has occurred in the suburban townships surrounding the region’s three cities. In response to these historical trends, the Neighborhood Improvement Zone (NIZ) represents the City of Allentown’s latest and arguably most successful strategy to incentivize development and investment in the region’s largest urban center. Since 2013, more than a million square feet of office space has been approved within the NIZ. This concentration of employment, housing and retail in downtown Allentown brings benefits that include bolstering the existing centralized transportation network and increasing accessibility to employment from across the region. At the same time, new office construction continues in suburban townships with ready access to the highway network. The challenge will be ensuring that, through design and location, the region’s employment centers are accessible to residents regardless of the place of residence or mode of travel.
Retail – Continued Transformation of the Shopping Landscape
Over the past 15 years, large-scale retail development has been dominated by big box retailers, often clustered together in power centers. However, the region has seen the development of new types of retail destinations, including “lifestyle centers” like the Promenade Shops at Saucon Valley and the Lifestyle Center addition to Lehigh Valley Mall. These retail destinations generally showcase upscale retailers and have an open air design laid out like a traditional urban or main street shopping district. More recently, Madison Farms in Bethlehem Township has incorporated a substantial retail component into a larger mixed-use development while development related to NIZ has brought over 90,000 square feet of retail space to downtown Allentown.
With the ongoing expansion of online shopping, retailers continue to adapt to the changing landscape by creating more experiential shopping experiences and adding more restaurants, entertainment venues and services to their tenant mix. Others may turn their shops into flexible spaces that can be used by online retailers as temporary pop-up shops. Overall, as the region continues to grow in population, many of its older strip retail properties and shopping centers offer prime opportunities for redevelopment that incorporates new retail space into a mix of residential, commercial, office and even light industrial/manufacturing uses.