1031 Exchange in Allentown Bethlehem Easton MSA
The Allentown-Bethlehem-Easton MSA offers competitive 1031 exchange opportunities with cap rates around 5.2-6.3%, property taxes at 2.78%, strong logistics and manufacturing employment, and median home prices of $250,470 in Pennsylvania's third-largest metropolitan area.
Population
886,418
Key Industries
Logistics & Warehousing, Manufacturing, Healthcare
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
2.78%
Assessment Method
Assessed Value (Pennsylvania Property Tax System)
MSA rate (2.78%) vs State average (1.41%)
+97% above state average, +173% above national average
Transfer Taxes & Fees
Transfer Tax Rate
1% state transfer tax
Pennsylvania realty transfer tax plus local transfer taxes may apply
Local Tax Incentives
Opportunity Zone Investment
Limited state tax benefits for investments in designated opportunity zones
Eligibility: Properties located in designated Pennsylvania Opportunity Zones
Keystone Innovation Zone
Tax credits for technology and innovation companies
Eligibility: Technology companies in designated innovation zones
Local Economic Revitalization Tax Assistance
Property tax abatements for qualifying improvements
Eligibility: Commercial and industrial property improvements meeting criteria
Opportunity Zones
Number of Zones
12
Key Locations
- Allentown Downtown
- Bethlehem South Side
- Easton Downtown
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
Exchange Timeline Calculator
Plan your exchange with local market considerations
Enter the closing date of your relinquished property to calculate your 1031 exchange deadlines:
Market Profile Dashboard
Economic indicators and market trends
Population
886,418
Growth: +0.66% annually
Median Income
$82,602
Unemployment
3.8%
Job Growth
+2.3% annually
Economic Drivers
Market Trends
Median Home Price
$250,470
Average Rent
$1,781/mo
Cap Rates
5.2-6.3%
Demographics
Median Age
41.4 years
Bachelor's Degree+
32.8%
Owner Occupied
74.2%
Property Type Analysis
Investment opportunities by asset class
Single-Family Rental
Strong investment opportunity with stable demand from logistics workers, professionals, and families in growing metropolitan area.
Market Metrics
- Cap Rates: 6.1%
- Vacancy Trends: Low vacancy around 4-6% due to strong employment growth and limited new construction
- Demand Forecast: Continued demand supported by logistics sector growth and Northeast corridor location
Risk Factors
- High property taxes above national average
- Competition from high homeownership rates
- Economic dependence on logistics sector
- Outmigration to lower-cost areas
Opportunities
- Logistics and warehousing employment growth
- Northeast corridor strategic location
- University and college rental demand
- Economic diversification and transformation
Multifamily
Excellent opportunities with strong rental demand from young professionals, students, and logistics workers.
Market Metrics
- Cap Rates: 5.2-5.8%
- Vacancy Trends: Very low vacancy around 4.2% with 82.1% lease renewal rates
- Demand Forecast: Strong demand with 10.5% rent growth and continued economic expansion
Risk Factors
- High property taxes affecting cash flow
- Limited new construction supply
- Competition from homeownership market
- Economic sensitivity to logistics sector
Opportunities
- University and college student housing
- Young professional market growth
- Logistics worker housing demand
- Opportunity zone benefits in select areas
Industrial
Outstanding opportunities supported by national logistics leadership and strategic Northeast location.
Market Metrics
- Cap Rates: 5.8%
- Vacancy Trends: Very low industrial vacancy around 2-4% due to massive logistics demand
- Demand Forecast: Exceptional demand from e-commerce growth and Northeast distribution needs
Risk Factors
- High property taxes for industrial properties
- Competition for prime logistics sites
- Infrastructure capacity constraints
- Environmental and zoning regulations
Opportunities
- Amazon and major retailer expansion
- E-commerce distribution growth
- Northeast corridor strategic location
- Intermodal transportation advantages
Office
Mixed opportunities with healthcare and professional services demand offset by remote work trends.
Market Metrics
- Cap Rates: 6.8%
- Vacancy Trends: Moderate vacancy around 10-12% due to remote work and space consolidation
- Demand Forecast: Stable demand from healthcare and professional services, uncertain for traditional office
Risk Factors
- Remote work reducing office demand
- High property taxes affecting returns
- Competition from newer suburban office parks
- Downtown parking and accessibility challenges
Opportunities
- Healthcare and medical office demand
- Professional services growth
- University and research facilities
- Opportunity zone benefits for downtown properties
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
Downtown Allentown
Urban core with government offices, entertainment district, and ongoing revitalization efforts
Investment Thesis
Strong rental demand from young professionals and government workers, opportunity zone benefits, and urban lifestyle appeal, though higher property taxes and ongoing development.
Median Price
$215,000
Price Growth
+2.8% YoY
Rental Yield
8.1%
Days on Market
12 days
Key Highlights
Development Pipeline
Mixed-use developments, loft conversions, and arena district expansion
Bethlehem
Historic steel city with SteelStacks cultural campus and Lehigh University proximity
Investment Thesis
Diverse rental market with students, professionals, and cultural workers, historic charm and university support, though economic transition challenges.
Median Price
$285,000
Price Growth
+1.8% YoY
Rental Yield
6.9%
Days on Market
8 days
Key Highlights
Development Pipeline
University expansion, cultural district development, and historic preservation
Easton
Historic city at Delaware River confluence with Lafayette College and downtown revitalization
Investment Thesis
Student and professional rental demand with college support and historic appeal, though smaller market size and limited growth.
Median Price
$245,000
Price Growth
+1.2% YoY
Rental Yield
7.4%
Days on Market
10 days
Key Highlights
Development Pipeline
Downtown revitalization and college-related development
Logistics Corridor (I-78/I-476)
Industrial and warehouse districts along major interstate highways
Investment Thesis
Strong industrial and logistics demand with major distribution centers and transportation access, though limited residential appeal.
Median Price
$320,000
Price Growth
+3.2% YoY
Rental Yield
5.8%
Days on Market
6 days
Key Highlights
Development Pipeline
Warehouse expansion, logistics facilities, and transportation infrastructure
Find Investment Properties
Discover replacement properties in this market
Ready to Find Your Replacement Property?
Get personalized property recommendations and expert guidance for your 1031 exchange in the Allentown Bethlehem Easton market.
Start Property SearchConnect with local specialists who know the Allentown Bethlehem Easton market
Compare Markets
See how this MSA stacks up against others
Compare Markets
| Metric | Allentown Bethlehem Easton (Current) | Reading | Scranton Wilkes Barre Hazleton | Harrisburg Carlisle |
|---|---|---|---|---|
| Population | 4.0M | 4.0M | 4.0M | 4.0M |
| Median Property Price | $750K | $750K | $750K | $750K |
| Average Cap Rate | 5.2% | 5.2% | 5.2% | 5.2% |
| Job Growth Rate | 2.1% | 2.1% | 2.1% | 2.1% |
| Rental Yield | 4.8% | 4.8% | 4.8% | 4.8% |
| Days on Market | 25 | 25 | 25 | 25 |
Frequently Asked Questions
Common questions about Allentown Bethlehem Easton 1031 exchanges
The Lehigh Valley offers strong cap rates of 5.2-6.3%, exceptional logistics sector growth, strategic Northeast corridor location, and diverse economic base. Despite higher property taxes, the market provides excellent rental demand and appreciation potential.
The region has become a national logistics leader with Amazon, FedEx, UPS, and other major distribution centers. This transformation from steel manufacturing to logistics provides stable employment and drives industrial real estate demand.
Yes, the region has 12 designated Opportunity Zones including downtown areas of Allentown, Bethlehem, and Easton. Pennsylvania offers limited state-level opportunity zone benefits compared to federal benefits.
Property taxes are high at 2.78% effective rate, significantly above the national average of 1.02% and state average of 1.41%. However, strong rental demand and appreciation potential can offset higher carrying costs.
The Lehigh Valley leads Pennsylvania in 18-34 year old population growth and attracts residents from Philadelphia and New York seeking affordability. However, 41% of buyers look to move out, primarily to lower-cost areas like Salisbury and Myrtle Beach.