Outer Borough Industrial Market Sees Leasing and Vacancy Increases in Q3: Report
By Isabelle Durso October 10, 2024 5:48 pm
reprints
New York City’s outer boroughs have seen some slightly contradictory trends, with an increase in both leasing and vacancies in the industrial market.
Year-to-date leasing activity for industrial space in the Bronx, Brooklyn, Queens and Staten Island reached 2.2 million square feet at the end of the third quarter of 2024, an 18.7 percent increase from the same period last year, according to a report from Cushman & Wakefield (CWK). That figure for the first three quarters of 2024 is equal to the 2023 total of 2.2 million square feet of activity in the outer boroughs, according to C&W.
Despite the increase in leasing, vacancy rates in industrial space in the outer boroughs have also gone up, thanks to new space coming on the market and tenants leasing less space. The overall vacancy rate during the third quarter of the year increased by 80 basis points since last quarter to 5.1 percent, surpassing 5 percent for the first time since 2020, according to C&W’s report.
And year-to-date net absorption of 82,000 square feet also declined significantly due to softening tenant demand and tenants taking less space, the report found.
However, with 1.9 million square feet of industrial space currently under construction and 792,000 square feet completed this year, things are looking up for the outer boroughs’ industrial market, according to C&W’s Dimitri Mastrogiannis, senior research analyst for New York’s outer boroughs.
“As new developments continue to come online, the industrial landscape is continuing to evolve to meet the burgeoning demand for modern, high-quality spaces,” Mastrogiannis said in a statement.
Average asking rents also rose by 45 cents per square foot since the last quarter to $28.79 as more “high-quality space became available,” C&W said.
Mastrogiannis said the rise in average asking rents was “driven by the completion of multistory warehouses without tenants and the scarcity of vacant industrial land fueling demand for [industrial outdoor storage] and low-coverage properties.”
Significant industrial lease transactions in the outer boroughs during the third quarter include Otto Environmental Systems’ 60,000-square-foot lease at 807 Bank Street in Canarsie, Brooklyn; plumbing company FW Webb’s 36,000-square-foot lease at 49-15 Maspeth Avenue in Maspeth, Queens; and electrical supplier Wholesale Electric Caribe’s 26,000-square-foot lease at 182-20 Liberty Avenue in Jamaica, Queens.
Isabelle Durso can be reached at idurso@commercialobserver.com.
