Albany industrial sector holding its own due to growth in tech sector.

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The Albany industrial market has become almost an incubation area for the nanotechnology industry, brining major tenants with large space needs to the area. Despite the recent downturn the industrial sector is still holding it own due to the growth and success of the technology industry.

Cory M. Tyksinski, principal broker/manager of NAI Platform notes that there was an initial drop in business, but that is was more of a knee jerk reaction as the economy started to slow and then essentially skidded to a stop last year.

The Upstate New York marketplace, and primarily Albany, is fairly insulated from the major downturns, and unfortunately, conversely the upswings in the marketplace,” notes Tyksinski. “That is primarily because we have the government seat here and we have a tremendous base in education, as well as in research and development and now technology.”

Therefore, Tyksinski explains that once people got over the initial knee jerk reaction, the market picked back up again.

“Actually, we have seen an upswing in the last 3 or 4 months,” he says.

Overall the growth of the nanotechnology sector has been a real boon to the market.

“We have seen a lot of what would be support business for the nanotechnology sector, but importantly we have a lot of bigger companies that are seated here, one of them being GE,” says Daniel H. Slote, associate broker for NAI Platform.

GE’s presence in the capital district equates to millions of square feet spread throughout the entire area. The company recently announced the construction of a new $100 million R&D facility, a project that is being funded in part by a grant that is helping to promote green energy. GE is also set to close a major lease with an undisclosed firm for a $60 million, 230,000-square-foot distribution center that will serve Hartford and Syracuse. Slote notes that companies like GE are attracted to this market because it of its access and proximity to major cities such as Boston, Hartford, Syracuse, Springfield and Uttica.

“It is a middle point of the thruway that runs north and south from the Canadian border all the way down to New York City,” Slote explains. “We are the cross roads of that and I-90, which runs west through the state all the way up through Syracuse and down to the Great Lakes and over to Boston. Because of our location, we have seen a great amount of growth in a push toward modal transportation through this area.”

Aside from its strategic location, the Albany market thrives because of its diversity. Tyksinski remarks that the market does not survive on one or two particular industrial user types in the marketplace, rather is home to a full spectrum of users.

“We have been called the new tech valley,” adds Slote. “There are an unbelievable amount of diversified types of companies coming to take R&D, flex space and manufacturing space.”

Because of the market’s versatility and location, vacancy rates have remained stable despite the ups and downs in the market. Tyksinski approximates that with an overall market of 50+ million square feet of industrial property, which takes into consideration office, industrial, warehouse, pure distribution, manufacturing, basically the full gamut, there is on average anywhere between 4 to 5 million square feet vacant at any time. This equates to a approximate vacancy rate of 10 percent. Rental rates are averaging $3.50 to $4 per square foot for lower end or smaller spaces and up to $7 and $7.50 per square foot for brand new buildings and build to suit possibilities.

While the Albany industrial sector is not facing an oversupply of new industrial space due to land constraints, Tyksinski and Slote are seeing concession packages from landlords that they have never seen in this marketplace in order to retain tenants or attract tenants. To retain tenants and entice those thinking of move, owners are giving older buildings face lifts, as well as making improvements in energy efficiency and providing better site characteristics to tenants.

“The landlords are realizing that they need to bring these properties up to current terms with newer construction,” says Tyksinski. “A 20-, 30-, 50-year old industrial building is getting new life because landlords are trying to keep their tenants.”

While most of the focus has been on renovations, both brokers speculate that in the future there are a few areas that will see some more growth. AMD, a micro devices group that develops nanotechnology for computers, and Advanced Technology Investment Company of Abu Dhabi recently formed The Foundry Company. The group is planning to construct a new state-of-the-art facility in Saratoga County on a 1,400-acre capus. The new facility is anticipated to cost about $1 billion dollars and should bring more than 1,400 direct jobs, and, through its operation, to generate an additional 5,000 jobs in the region. Slote and Tyksinski believe that this is only the beginning for the area.

“We firmly believe that within a 10 minute drive of that 1400-acre campus you are going to see around 75 service providers that need to be within a few minutes drive of that operation springing up all over,” says Tyksinski. “Northern part of the capital region in Saratoga County is going to see tremendous growth in the next 3 to 4 years. It is basically going to mimic what went on in Austin, Texas, years ago and Tech Valley in Seattle.”

In the past, affair amount of development that was drawn to the area was due in part to the successful Empire Zone program. However, changes to that program began to make it more of a deterrant, so a new program, currently called the Blue Print Plan has taken its place. The new program focuses on providing shovel ready sites for developers with a push to get manufacturing to come to the area.

“They can basically put a shovel in the ground in less than 6 months and have a facility in less than a year,” says Tyksinski.

— Stephanie M. Specht

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