Northeast Market Reports

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More Industrial Product Lands Near Airports

by Taylor Williams May 17, 2019

The U.S. industrial market has now recorded more than 240 million square feet of net absorption for four consecutive years, the strongest run on record, with an all-time high of 284.9 million square feet in 2018, according to Cushman & Wakefield. In New York City, the largest consumer market in the United States, the current industrial supply of approximately 170 million square feet remains heavily constrained, especially around the region’s transportation hubs. Nowhere is the demand for industrial product more apparent than in the area surrounding John F. Kennedy Airport in Queens, which handles more than 1.3 million tons of air freight every year, according to the Port Authority of New York and New Jersey. JFK is the second busiest air cargo airport on the East Coast behind Miami International Airport and just ahead of Newark International Airport. “There’s really not a lot of land near JFK,” says David Hercman, director of asset management at Long Island-based Milvado Property Group. “So, whatever supply is there is there.” Time-sensitive industrial users like freight forwarders, which organize shipments from manufacturers or producers overseas, need to be close to the airport in order to get products to the end user as quickly as …

May 17, 2019

Market Reports New Jersey Northeast Northeast Market Reports Office

The Silver Lining of the Amazon HQ2 Outcome in Northern New Jersey

by Taylor Williams May 16, 2019

Despite the heartache from losing the bid for Amazon’s second headquarters, New Jersey is undoubtedly in a more competitive position than it was before the selection process began. The exercise of responding to Amazon’s request for proposals showcased many of New Jersey’s strengths, such as its talented labor pool, access to higher education and vast transportation infrastructure. As we now know, these assets weren’t enough to secure the Amazon campus, leaving state officials and business leaders motivated to work on those areas identified as falling short. But that doesn’t take away from what the state offers both corporate occupiers and institutional investors. To start, building owners are increasingly investing significant capital to improve and expand New Jersey’s aging supply of office properties. This is music to a tenant’s ears and, as a result, the office market continued its streak of growing occupancy with 302,577 square feet of positive absorption in the fourth quarter, according to Transwestern. Where many of the new leases were signed, landlords committed to substantial capital improvement programs. For the past several years, the best lease-up success stories have come from owners that upgraded their properties to current standards and added amenities preferred by today’s dynamic workforce. …

May 16, 2019

Market Reports New York Northeast Northeast Market Reports Retail

Long Island Serves as Launchpad for New Retail Concepts

by Kristin Harlow May 15, 2019

Long Island represents one of the most sought-after suburban retail markets in the Northeast. It’s almost guaranteed that when a retailer opens on Long Island — especially concepts centered on fast-casual dining, boutique fitness experiences and specialized beauty services — it becomes a top performer in the chain’s overall portfolio. Service-oriented retailers are quickly replacing concepts cannibalized by online shopping and are proving to be wildly successful in this important market. With an average household income that trends higher than the national average, a dense population — 2.8 million people live in Nassau and Suffolk counties — and a highly educated consumer base, high-profile national chains recognize the value of having a presence on Long Island. The daytime population swells in areas around shopping centers, hospitals and medical districts, as well as office corridors, while new multifamily and mixed-use developments promise to bring increased foot traffic to retailers seeking a presence on Long Island. Additionally, suburban downtown areas are making resurgences thanks to relaxed zoning restrictions. As the areas around real estate hotbeds like the Route 110 office corridor in Farmingdale, New York, and the Roosevelt Field trade area continue to evolve, new retail centers and mixed-use campuses are emerging. …

May 15, 2019

Market Reports New York Northeast Northeast Market Reports Office

New York City, There’s a Smarter Way to Do Glass Buildings

by Taylor Williams May 8, 2019

New York City recently passed the Climate Mobilization Act, the first real action by any city to require buildings’ greenhouse gas emissions to meet global climate targets. The new law requires owners of large buildings to meet carbon footprint standards or face millions of dollars in annual fines. The emission limits will begin in 2024 and become increasingly stringent from there. The legislation primarily applies to commercial office and market-rate multifamily buildings over 25,000 square feet. According to Urban Green, these buildings account for about 60 percent of the total building area in New York City — those that make up the Manhattan skyline. While skyscrapers will be forced to act first, significant levels of investment will also be needed for public buildings, affordable housing and non-profits. The Real Estate Board of New York (REBNY) estimates the total cost of the upgrades needed to comply with the new law is about $4 billion. Building owners can calculate the performance targets they’ll need to meet and the associated fines if they fail to meet them. While it may be possible to buy renewable energy credits to offset emissions, it is unclear how many will be available. Some buildings will need to …

May 8, 2019

Market Reports New Jersey Northeast Northeast Market Reports Office

Strengthening Performance Signals Good Things to Come for Northern New Jersey Office Market

by Kristin Harlow April 24, 2019

Strengthening office performance in the northern New Jersey marketplace signals good things to come as 2019 unfolds. The market yielded approximately 292,000 square feet of net occupancy gains in 2018. This was fueled by three straight quarters of more than 1 million square feet in new leasing activity, with annual demand finishing 15.4 percent ahead of 2017. This progress runs parallel to improving employment numbers. At year-end, the Garden State unemployment rate registered at 4 percent, its lowest point since mid-2001. This marks a 70-basis-point decline year-over-year, with private-sector employment increasing by almost 62,000 jobs. Within this context, the diversity of New Jersey’s tenant mix is making itself apparent. No one sector is predominantly making waves. We are seeing healthy Class A leasing activity among life sciences, technology, financial, professional services and a range of other space users that comprise the state’s balanced occupier base. Last year was proof that both urban and suburban submarkets continue to thrive. Where one company prefers the Hudson Waterfront with immediate access to mass transit and ability to draw talent from New York City, another may seek a suburban campus that draws upon a labor force of commuters driving from the state’s western counties …

April 24, 2019

Market Reports Multifamily New Jersey Northeast Northeast Market Reports

Multifamily Demand Stays Strong in Northern New Jersey

by David Cohen April 10, 2019

Rising costs of  homeownership and the lack of SALT deductions on federal income tax returns will help maintain the strong demand for apartments in Northern New Jersey. We are seeing an increase in construction activity as municipalities settle their affordable housing lawsuits with developers and long-awaited projects, especially those located along major public transportation hubs, are completed. In Jersey City and Hoboken, these new projects are placing upward pressure on Class A vacancy as they take time to lease. We see an increase in more concessions being offered, which will dampen the appreciation of monthly rates. This could impact the upgraded Class B buildings, which find themselves battling for renters with recent finished projects and more affordable options that can be found inland. In areas west of the Gold Coast, we see continued higher occupancy rates with many landlords reporting well under 30 day turnover rates, unless major renovations are needed. Outside of Hudson County, the overall vacancy factor trends between 2 and 3 percent allowing for increased revenue, according to research from Marcus & Millichap. Landlords in strict rent control markets are faced with the decision of either renovating to increase rents via capital improvement programs or take advantage …

April 10, 2019

Industrial Market Reports New Jersey Northeast Northeast Market Reports

Port-Driven Industrial Demand Remains Strong in New Jersey

by David Cohen April 10, 2019

The strength of the New Jersey industrial market continues to evidence itself through consistent demand, rising rental rates and record low vacancy rates across the region. Much of the recent success has been the result of e-commerce growth and expansion among distribution and light manufacturing businesses looking to tap into the market’s port, air cargo, and major transportation networks. While developers have been working to bring new inventory to the market, the new space is being absorbed quickly, leaving tenants with limited options for space. The New Jersey industrial market has seen significant demand for the past 20 quarters and a steady, often rapid, rate of absorption. The market saw 13.6 million square feet of absorption in 2018, according to research from Avison Young. The epitome of this market expansion trend and the most obvious to investors is the activity along the New Jersey Turnpike, from Exit 8A where the market was at a staggering 1 percent vacancy rate at the end of 2018 up to the Exit 10 Edison Market, where rents may soon reach $9 per square foot net. Notable Deals A little farther north into the Carteret /Avenel and Linden/Elizabeth markets much of the activity is focused …

April 10, 2019

Market Reports Massachusetts Northeast Northeast Market Reports Retail

Entertainment, Grocery Sectors Expand in Greater Boston Retail Market

by David Cohen April 3, 2019

The greater Boston retail market experienced a substantial rise in the vacancy rate to 9.5 percent through June 2018, reflecting an 11.3 percent increase in unoccupied space, compared to a level of 8.6 percent in 2017. At the same time, total inventory ended the year at 196 million square feet, a gain of 1 percent, nearly the same square footage as the increase in vacant space. This resulted in a nominal negative absorption rate of only 21,900 square feet. A considerable number of large format store closings and chain liquidations were responsible for the disappointing outcome, which could have been even worse without a significant number of retail conversions to non-retail space cushioning the impact. The retailer gaining the most retail space in the region was Wegmans, adding a two-level store at Natick Mall and a second unit at the redeveloped Meadow Glen in Medford. In second place was 7-Eleven, completing its brand conversion from Tedeschi Food Shops, which it acquired in 2015. Market Basket rounded out the top three, adding new stores in Lynn and Fall River. By number of new units, 7-Eleven added 68, the most of any retailer. Metro PCS was a distant second, adding 16 stores …

April 3, 2019

Industrial Market Reports Northeast Northeast Market Reports Pennsylvania

Philadelphia Warehouse Inventory Fails to Keep Up with Demand

by David Cohen March 21, 2019

The combined greater Philadelphia industrial markets closed 2018 with 718,266 square feet of positive absorption, according to research from NKF. Year-over-year, overall vacancy declined 20 basis points to 5.5 percent, while warehouse vacancy increased 140 basis points to 6.3 percent. 3.4 million square feet delivered over the past twelve months with 2.3 million square feet designated as warehouse space. The Southeastern Pennsylvania industrial market closed the year with a total of 264,511 square feet in negative absorption. Year-over-year, total vacancy for all property types increased 70 basis points to 6.2 percent. Philadelphia County accounted for a majority of Southeastern Pennsylvania’s occupancy gains, closing the year with 854,488 square feet of positive absorption. This was largely due to significant gains in occupancy that occurred in the first quarter. During the first three months of the year, Dependable Distribution moved into 332,640 square feet at 9801 Blue Grass Road and 185,000 square feet at 11200 Roosevelt Boulevard. In addition, Rainbow moved into 365,000 square feet at 2951 Grant Avenue, also in the first quarter. The negative absorption in the Southeastern Pennsylvania suburban market is not a sign that demand has slowed, quite the opposite. Ecommerce and distribution companies are aggressively seeking high-bay …

March 21, 2019

Market Reports Massachusetts Mixed-Use Multifamily Northeast Northeast Market Reports Office

Greater Boston Commercial Market Remains Robust

by David Cohen March 13, 2019

While other U.S. cities have demonstrated volatile economic markets, Boston has sustained a strong, healthy economy for more than 40 years. This economic health coupled with the city’s diversity of industries has had a lasting, positive impact and increased demand for commercial space in the greater Boston market. The snapshot of the Class A and B, lab and office market is strong but shows some signs of regression. Today, overall vacancy for lab and office including sublet space is 12.8 percent, according to research from Colliers International. When you break down the numbers by region, the current downtown Boston office market has 71 million square feet, with a 9.2 percent vacancy rate. Cambridge has 23.6 million square feet of space and 3.8 percent vacancy and the suburbs total 123.5 million square feet with 16.6 percent vacancy. The entire Boston area absorption for lab and office space is 5.2 million square feet. While those stats are favorable compared to the last two years, (2017 with 1.8 million square feet and 2016 with 1 million square feet), they are dwarfed by 2015 which had absorption of 5.8 million square feet. It is also the first time that Class B rents have topped …

March 13, 2019

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