NYC’s Industrial Market Remains Stable Despite Pandemic
Despite the coronavirus pandemic decimating parts of the real estate market, New York City’s industrial sector remained stable in the second quarter of this year, with decreased availability and steady asking rents, according to a report by CBRE (CBRE).
CBRE’s report found that leasing of industrial space had a positive absorption of more than 575,000 square feet in the second quarter, causing the availability rate to drop by 50 basis points to 8 percent.
The industrial sector had about 1.3 million square feet of leasing velocity in the second quarter, according to CBRE. While it was a 54.9 percent decrease quarter-over-quarter, the amount of space leased was still on par with the 1.3 million-square-foot average leased in each of the past six quarters.
Average asking rents and sale prices for industrial properties remained constant quarter-over-quarter around the city, at $23.37 per square foot and $383.19 per square foot, respectively, according to CBRE.
Even though the pandemic has caused Manhattan’s office market to face record lows of leasing activity this year, the industrial market has remained strong, thanks to increased demand for last-mile warehouse spaces from e-commerce companies as more people ditch brick-and-mortar to shop online.
“The demand for warehouse and distribution space by e-commerce companies drove the sector’s leasing activity in the second quarter,” Nicole LaRusso, CBRE’s director of research and analysis for the tri-state region, said in a statement. “With consumer spending habits drastically shifting toward online shopping, e-commerce companies’ needs for warehouse and logistics space will continue to position the city’s industrial properties as a safe investment for building owners.”
E-commerce tenants accounted for four of the five largest industrial leases in the second quarter, which included Amazon (AMZN)’s 300,000-square-foot deal at 55-15 Grand Avenue in Maspeth, Queens, and its 205,409-square-foot one at 1055 Bronx River Avenue in the Soundview neighborhood of The Bronx.
The Bronx was the biggest contributor to the industrial leasing activity in the second quarter of this year with more than half of the velocity, about 680,000 square feet, recorded in the borough, CBRE found.
However, while the average sales price remained stable quarter-over-quarter, the 565,000 square feet sold in the second quarter was a 68 percent decrease compared to the first quarter, according to CBRE.
The Bronx also had the most sales in the second quarter, representing six of the 14 sales recorded in the quarter and totaling nearly 105,000 square feet, CBRE found.