Pennsylvania Data Center Boom Skips The Lehigh Valley
The Lehigh Valley’s deep-seated manufacturing legacy has left it with ample access to power, but that doesn’t necessarily mean it is a good fit for the booming data center industry.
A view of an industrial property in the Lehigh Valley
Developers in the sector are prioritizing other parts of the state due to the Lehigh Valley’s lack of available sites, high land valuations and a growing trend of resident pushback during the entitlement process.
“I don’t think this is going to become a Northern Virginia type of market,” Trammell Crow principal John Pollock said during Bisnow’s Lehigh Valley State of the Market earlier this month at 400 Boulder Drive outside Allentown.
“There are much easier places to build these data centers in other locations that people are already pursuing,” he added.
The Lehigh Valley’s easy access to the Port of New York and New Jersey means it is a mature industrial market. Most of the prime developable sites have already been built on, Pollock said.
That contributes to high land valuations in the region, which have only grown as the data center development frenzy has inflated asking prices for potential industrial sites.
As a result, warehouse projects Pollock was pursuing in the Valley have become difficult to pencil as well.
“I’m sure everybody has at least one story of talking to a land seller, and their land price expectations have gone through the roof for what they’re reading in The Wall Street Journal about what the land is selling for in Salem Township in Luzerne County,” he said.
“There have been multiple cases where I’ve been talking to land sellers, and I’ve had to walk away.”
Bisnow/Max Kleinberg
Fitzpatrick Lentz & Bubba’s Frank D’Amore, Hanover Co.’s Dan Holt, Trammell Crow’s John Pollock, JG Petrucci Co.’s Peter Polt and JVI’s Jim Vozar
The e-commerce boom has dramatically transformed the Lehigh Valley into a dense warehouse hub in recent years. The trend picked up even more steam in the aftermath of the pandemic.
The region’s industrial inventory grew 23% from 125.7M SF in the first quarter of 2020 to 154.8M SF in Q1 2026, according to reports from the Lehigh Valley Economic Development Corp.
Many residents dislike the changes, and broad anxiety about data centers has fanned the flames of resentment toward industrial developers overall.
“I cover New Jersey, New York state, Pennsylvania, Maryland, Virginia,” Hanover Co. Regional Development Partner Dan Gordon said.
“The Lehigh Valley may be on a shortlist of the most difficult places in which to entitle a project across that entire region. It can be almost impossible, and that’s even if a project is by right with zoning in place. You may still run into community opposition.”
The tough discussions that warehouse developers are having with residents often touch on data centers, even if one of the facilities is not part of the plans, JG Petrucci Co. Executive Vice President Peter Polt said.
Allentown Mayor Matt Tuerk said developers and operators need to explain data centers to community members in a more effective way.
Bisnow/Sonja Geddes
CLA’s Andrea Brazy, Allentown Mayor Matt Tuerk, Jaindl Enterprises’ Zachary Jaindl, City Center Group’s Josh Taykowski, GREA’s Luke DeLuca and D&D Realty’s Nicholas Dye
“What people envision when they hear that word ‘data center’ varies wildly, and I don’t think it necessarily conforms to reality,” he said.
“You all have to do a better job of communicating what these things are to the public,” the mayor added. “Right now, data center is effectively a bogeyman. Nobody knows exactly what it means. They just know they don’t like it.”
Despite the pushback, Pollock said there is a modest stream of warehouses being converted into data centers.
That includes Prologis’ plans for the 1M SF Lehigh Valley East 16 property in Allen Township and Quantum Group’s similar proposal for a 224K SF facility on the outskirts of Allentown.
But Pollock said the Valley’s ample supply of power has led to the influx of a different type of industrial user.
“We have seen a number of tenants who are looking for smaller spaces, call it around 100K SF, that are manufacturing oriented, that need a decent amount of power,” Pollock said.
Some of those tenants are supporting data center developments in other parts of Pennsylvania and around the nation.
“We’re talking electrical, plumbing, HVAC, and a lot of those components are being made here in the Lehigh Valley,” Polt said. “We’re seeing a lot of machine shops and electrical contractors need more space, and I don’t see that stopping anytime soon.”
