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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS 16 THE JOURNAL OF COMMERCE www.joc.com SEPTEMBER 4.2017 By Hugh R. Morley US SHIPPERS ARE increasingly setting up warehouses and distribution centers in Penn- sylvania's Lehigh Valley, a 60- to 80-mile dray from the Port of New York and New Jersey. Average rental rates are approximately $2 per square foot cheaper than in central and northern New Jersey, and importers have a better selection of modern facilities. Amazon, FedEx, Wal-Mart, and NFI have set up operations in recent years, grabbing some of the 10 million square feet of indus- trial space that has been constructed around the former Pennsylvania manufacturing hub. That is a 9.5 percent space expansion to 115 million square feet in a region crisscrossed by interstate highways 78 and 81. Another 5 million square feet of industrial space is under construction, with 10 million square feet more space proposed, according to the Lehigh Valley Economic Development Corp. "The Lehigh Valley is an important des- tination, and origin, for cargo that moves through the Port of New York and New Jer- sey," said Beth Rooney, assistant director of the authority's port division. "Now, the development of these warehouses and DCs, with the potential for this new rail terminal, changes the timing, the cost, the efficiency, (and) the environmental footprint (of using the port), for the better." The development surge in Lehigh Valley is part of a nationwide shift in which shippers are looking at secondary markets because warehouse vacancies have become sparse in the largest markets, and prices have risen. Indianapolis, for example, is getting overflow business from Chicago, and Reno, Nevada, is getting business from Northern California. Likewise, San Antonio is getting secondary market business in Texas, and Phoenix is helping serve Southern California. Prime logistics space in the Lehigh Val- ley, a drive of about 60 to 80 miles down Route 78 from the port and slightly more from New York City, rents for about $5.50 to $5.75 a square foot. That is less than the $7.55 per average square foot rate in Central Jersey, which is about 35 miles from the port and 45 miles from New York City, according to industrial real estate firm CBRE. Prime space in the northeastern New Jersey region known as the Meadowlands, about 10 miles from the port and the city, goes for $8 to $9 per square foot, CBRE said. The Lehigh Valley, which some liken to a small, East Coast version of the Inland Empire that serves the ports of Los Angeles and Long Beach, has seen its vacancy rate fall to 4.1 percent, according to an outlook report released by real estate firm JLL. The rate was about 6.5 percent at the start of 2016, according to the economic development cor- poration. In comparison, the vacancy rate in Central Jersey is 3.2 percent, and in Northern New Jersey, 4.4 percent, JLL said. Just as important as the available ware- house volume is the quality, CBRE said, with the Lehigh Valley offering a newer inven- tory of larger, taller warehouses that are more able to meet demand, as well as a more plentiful labor supply. NY-NJ LOOKS INLAND — TO PENNSYLVANIA The New York-New Jersey port is weighing new rail connections as the DC market explodes in the Lehigh Valley "The I-78-81 corridor in Pennsylvania is extremely hot. And Lehigh Valley is ground zero for what's happening along this corridor."