For the third consecutive year, a sold-out audience of top commercial real estate professionals selected the Lehigh Valley as their location to gather to discuss trends and forecasts in their field.
About 350 commercial real estate brokers and others participated in the annual meeting of the Philadelphia chapter of the Society of Industrial and Office Realtors®. The event, at the ArtsQuest Center in Bethlehem, kicked off Monday evening Sept. 25 and continued with several panels on Tuesday Sept. 26.
“The Lehigh Valley is excited to host the regional SIOR event where real estate professionals can network, learn about the latest trends, and collaborate on strategies to continue delivering top-notch projects that benefit our communities,” said Kristin Cahayla-Hoffman, Vice President of Business Development and Attraction at Lehigh Valley Economic Development Corp. (LVEDC).
The discussions are particularly relevant for the Lehigh Valley, one of the fastest-growing parts of Pennsylvania with a population nearing 700,000 and where manufacturing is the largest sector of the regional economy. With a Gross Domestic Product of $47 billion, the Lehigh Valley ranked second in the nation in 2022 among mid-sized regions in the number of new and announced economic development projects.
The Society of Industrial and Office Realtors® (SIOR) is the leading global professional office and industrial real estate association. It has 3,700 members in 45 countries and 722 cities.
SIOR conferences are designed to help members connect, build strong relationships, and facilitate business deals while enhancing their knowledge of the latest trends in industrial and office commercial real estate.
Adrian Ponsen, Director of U.S. Industrial Analytics, and Phil Mobley, National Director of Office Analytics at CoStar Group, kicked off the conference Tuesday with a forecast for the office and industrial market.
“You can really tell a very different story about how the industrial market is doing right now, depending on what data points you are looking at, even more so than usual,” Ponsen said. “NOI growth, nine and a half percent year-over-year, literally never been better, three times the historical average. And it's stronger than it was even when the market was just roaring in 2021,” he said, explaining that expiring leases signed years ago are being renegotiated at today’s higher rates.
Leasing activity has returned to pre-pandemic levels, “which from a brokerage perspective is still pretty good news. Overall leasing levels are still solid,” he said.
Other data indicate signs of softness in the market, Ponsen said, with construction starts well below the long-term average. Vacancy rates remain tight but are rising.
“But equally, there's also a lot of data points that are falling into place that suggests that once we meet here a year from now, we're going to be on the cusp of a market that's really going to start to swing back in landlords’ favor, potentially in a pretty significant way,” he said.
President of SIOR Philadelphia Chapter Colin Flynn of the The Flynn Company thanked the event’s 40 sponsors, which included LVEDC. The keynote sponsors were First Industrial Realty Trust and Majestic Realty.
Mark Duclos, President of Sentry Commercial in Connecticut who served as Global President of SIOR in 2020 and 2021, said SIOR is a strong organization and getting stronger every day.
“We have never had stronger volunteer leadership teams all throughout the country,” he said. “The volunteers work every day to make sure that this pin on your lapel, or SIOR at the end your name, means something.”
The agenda for later Tuesday included:
Greg Lindsay, an author and futurist, was scheduled to deliver a keynote address about the promises and perils of artificial intelligence, how autonomy is upending society, and what can be done about it.
His presentation, titled “Autonomous Everything: AI, the Future and What We Can Do About It,” focused on how AI can transform industries, including real estate. He planned to delve into how autonomous trucking‐and‐delivery could blur the line between industrial and retail, and whether an AI-driven productivity boost would be the death knell for offices.
Pete Davisson from Jackson Cross Partners was scheduled to moderate a panel discussion about the impact of hybrid and remote work on the office market.
Long-term leases signed before the pandemic and short-term deals signed after 2020 are expiring. The discussion, titled “Opportunity Exists within the Office Market…You Just Need to Get Creative,” focused on how investors and developers are getting creative in the potential uses for former office space and how those decisions could affect the market.
The scheduled panelists were Rich Gottlieb, Keystone Development & Investment; Keith Hontz, Equus Capital Partners; and Chip Walters, The Buccini/Pollin Group.
Another scheduled panel discussion was to explore the growth of distribution centers and how it has cooled from its fever-pitch of the previous few years. With tenant demand returning to normal market conditions, the discussion was to address the latest trends for developers and occupiers of industrial space.
The panel, titled “Industrial Market Insanity is Over but What’s Next?” was moderated by Brian Knowles of Lee & Associates of Eastern PA. The scheduled panelists were Troy Adams, NFI; Ian McDonald, Panattoni Development Company; and Peter Polt, J.G. Petrucci Company.
Attending the SIOR conference were developers, builders, engineers, real estate agents, consultants, and others. Attending from LVEDC were Don Cunningham, President and CEO; Cahayla-Hoffman; Doug Warfel, Director of Attraction and Lending; George Lewis, Special Assistant to the President & CEO; and Paul Muschick, Director of Communications & Media Relations.