executives are notas concerned about the Pennsylvania industrial market as some of their peers seemto be.
For example,a Prologis Inc. executiveon the company's April 19 earningscall had identified the state, alongside the city of Houston, as a mainarea of concern.
Askedby an analyst to weigh in on the issue during the company's April 28 first-quarterearnings call, President and CEO Jim Connor replied: "I'll tell you, I'm alittle bit surprised at some of the questions regarding particularly the LehighValley. … You're still talking about vacancy in that overall market that's lessthan 4% and really strong demand, particularly as I said earlier with the e-commerceand consumer products companies."
DukeRealty closed the first quarter with in-service occupancy of 95.7%, representinga 70-basis-point decline from year-end 2015. Connor attributed the occupancy dropentirely to a 1.1 million-square-foot spec project in the Lehigh Valley that cameinto service at zero-percent leased.
Connorsaid there is interest in the building and testified to long-term strength of thearea as "a big regional bulk distribution market that services the entire NortheastU.S. population base."
"Sogiven the activity we're seeing on our single 1.1 million square-foot building,I would tell you, I'm not concerned about that market, either from a supply perspectiveor a demand perspective. … So I think some of that concern is a little misplaced,"he said.