The industrial market has remained very stable over the past four years in New York’s Capital District, and promises a strong pattern of growth for the next six to 12 months. As the office market struggles in the central business district, fueled by the state’s tenuous occupancy of numerous privately held properties, the industrial marketplace has flourished with extended commitments from existing users and the entrance of new users. With Upstate New York making a name for itself in the nanotech industry, a great deal of national attention has been drawn to the region, which had previously been characterized as not being nationally significant. In addition to the tech industry, national distribution groups have committed to and/or focused their site searches in the Capital District.
One of the area’s most significant industrial deals this year involved a local manufacturer making a 15-year lease commitment to remain in the region, by tripling its footprint in a single-tenant building of 140,000 square feet. This commitment to the Albany marketplace was a further sign of the support from the state’s economic development officials, the abundant availability of the appropriate workforce, and the distribution characteristics of the region. At full capacity, this facility will eventually employ 180 workers.
Other regionally significant projects include the completion and continued expansion of the Global Foundries facility in the Luther Forest Technology Campus in Malta, New York. This project has been touted as the largest current private construction project in the United States. The construction project has created 4,300 construction-related jobs. The site has achieved the status of the second-largest foundry in the world.
In addition to the Global Foundries expansion, The University at Albany School of Nanoscale Science and Engineering has undergone a $365 million 280,000-square-foot expansion, attracting groups such as Intel. This expansion is especially relevant to the distribution demand, as suppliers and service providers seek to locate within minutes of these projects.
With the expansion of Global Foundries and the university, economic developers have been branding the Capital District as the “Nanotech Capital of the World.”
The strongest demand has been for modern facilities ranging from 8,000 to 20,000 square feet. With an abundance of users, rental rates and purchase prices have continued to increase. There has also been a significant demand for facilities with the ability to accommodate outdoor storage.
While most transactions have been for spaces less than 20,000 square feet, several large transactions have occurred this year. In August, FedEx began operations at a regional mini-hub location at 253 Troy Road in East Greenbush, New York. This facility is 250,000 square feet and was built over the last year. Also in August, Comfortex announced the purchase of its long-standing leased location of 105,000 square feet in Watervliet. This purchase symbolizes an extended commitment to maintaining a presence in this marketplace after closures in other markets. In early 2012, Restaurant Depot purchased six acres to construct a 60,000-square-foot wholesale restaurant supply facility.
A holder of industrial properties, The Galesi Group maintains its position as the largest developer in the market with more than 10 million square feet of industrial space. Galesi recently committed to building a 60,000-square-foot light industrial building on speculation in Green Island to accommodate the existing industrial demand in the region. This newly constructed building will be located at Island Park, which currently has approximately 700,000 square feet built and the ability to expand to 1 million total square feet. The park is home to a wide range of companies, from large users such as Sealy Mattress (253,000 square feet) down to much smaller users of approximately 8,000 square feet. Green Island has a long history based in manufacturing and has focused this park on manufacturing users as opposed to pure distribution-oriented tenants.
A recent setback for the region is the departure of a long-standing manufacturer in the community, Albany International. The company recently announced the pending sale of its original manufacturing facility in Menands, New York.
Local, regional, and national developers have struggled to find available lands with the appropriate zoning. However, the projects that have been completed have experienced above-average absorption rates and conditions remain favorable for the development community. Older industrial buildings continue to struggle with higher vacancy rates based on the operating inefficiencies. With a relatively low inventory of modern-style facilities, the demand for these types of facilities continues to grow.
— Tyler Culberson, industrial specialist with NAI Platform based in Albany, New York