New York's outer boroughs remain strong as supply dwindles
With more and more New York City industrial neighborhoods becoming gentrified, industrial properties are in increasingly short supply. The situation is especially notable in the outer boroughs, where most of city’s industrial real estate activity is focused. Over the past ten years, approximately 30% of industrial property in the outer boroughs has been converted for other uses.
In fact, the city’s decision to rezone industrial neighborhoods for residential and commercial development has created a strong market for warehouse and manufacturing spaces. The outer boroughs are all experiencing similar industrial market conditions, with a vacancy rate hovering at about a mere 3%.
In Brooklyn, the Bush Terminal and Gowanus areas remain heavily industrial, while Red Hook, Green Point and Sunset Park are seeing an increase in residential developments. The Bronx has always offered a smaller inventory of warehouse and manufacturing facilities, predominately in Port Morris and Hunts Point, and recent conversions have made availabilities tighter than ever. The industrial market on Staten Island, which was always limited, has not experienced much change.
Queens is currently the most active borough in the industrial sector. Many neighborhoods, such as Woodside, Maspeth, Corona and College Point, have kept their industrial identities. Other areas, like Astoria and Flushing, are seeing rapid conversions to other uses. Flushing, in particular, is seeing a great deal of residential and commercial activities. The interest in this central Queens neighborhood is so overwhelming that rents and sale prices are skyrocketing, and most landlords have sold their industrial properties for redevelopment.
For the most part, industrial rents in New York City have remained stable. Properties in Queens and Brooklyn are going for approximately $10 to $15 per square foot. In the Bronx, it ranges from $8 to $12 per square foot. Due to the tightening inventory, industrial landlords are having no trouble finding and retaining tenants. However, owners of smaller buildings at 20,000 square feet or under are noticing that there is a better market for purchase. The buyers include both investors and users.
The city’s rezoning laws and the conversion of warehouses and manufacturing plants have contributed to the buoyant nature of New York’s industrial sector. Demand has remained the same, but there is fewer product. The industrial market has been strong for the past six years, and this is expected to continue.
Sanford Zuckerbrot founded Sholom & Zuckerbrot in 1962 and currently serves as its chairman. He can be reached at [email protected]