Industrial Leasing in NYC’s Outer Boroughs Hits 5-Year High to Start 2024

It turns out industrial space is still in “red-hot” demand in New York City’s outer boroughs. 

Leasing activity outside of Manhattan hit 1 million square feet in the first quarter of 2024, according to a report by Cushman & Wakefield (CWK). That’s up 83 percent from the 545,401 square feet signed during the same time last year and a whopping 173 percent from the 366,626 square feet leased last quarter, the report found.

In fact, first-quarter leasing volume hasn’t been this high since 2019, when the Bronx, Brooklyn, Queens and Staten Island saw a bumper crop of 1.04 million square feet of industrial deals in the first quarter of that year.

The biggest outer boroughs industrial lease in the first quarter of 2024 was film production company Manhattan Beach Studios‘ 240,000-square-foot deal at 66-31 and 66-35 Otto Road in Glendale, Queens.

On the development pipeline, there were 1.5 million square feet of new industrial construction underway in the outer boroughs at the end of the first quarter, down from 1.9 million square feet at the end of the previous quarter.

So far this year, some 414,000 square feet of new industrial space has been added to the market. While the developers of these projects have been fretting a cooldown may await them when the new product hits the market, the outer boroughs’ “red-hot start to the year” makes it look like that won’t be the case, according to Dimitri Mastrogiannis, a senior research analyst at C&W.

“The industrial market has continued to be a bright spot in New York’s commercial landscape as demand continues to outweigh supply,” Mastrogiannis said in a statement.

Heavy demand has been the theme for nearly a year now, and 2024 has been no different. The year kicked off with nearly 500,000 square feet of positive absorption, the third consecutive quarter in which demand for industrial space has overtaken supply.

The market’s overall vacancy rate remained stable at 4.5 percent in the first quarter, with slightly lower rates in the Bronx and Queens markets. 

Average asking industrial rent, meanwhile, dipped to $28.14 per square foot, a 32-cent decline quarter-over-quarter.

“While direct average asking rents experienced a slight decrease, the market’s stable overall vacancy rate and expanding development pipeline serve as a great indicator of continued growth and demand for high-quality industrial space within New York City,” Mastrogiannis said.

Abigail Nehring can be reached at anehring@commercialobserver.com.