Rezoning, retail interest squeeze industrial inventory

TRD New York /
Jan.January 10, 2014 02:05 PM

Rents at industrial properties in Brooklyn and Queens are on the rise as rezoning, incoming retail tenants and a recovering economy boost demand and squeeze availability.

A 37-block swath of industrial blocks in Long Island City were rezoned in 2001 for residential and commercial use, and nearly 200 blocks along the North Brooklyn Waterfront were similarly re-categorized in 2005. The loss of such large chunks of space, coupled with a recovering economy that is lifting the number of businesses that want to be located within the five boroughs, resulted in rising rental rates in industrial nabes. This despite the fact that industrial properties have long been thought of as the industry’s “stepchild,” as The Real Deal reported.

The average asking rent per square foot for industrial space in the outer boroughs increased nearly 25 percent, to $14.25 last year, up from roughly $11.50 in the middle of 2011. In 2013 alone, the average rent jumped around 10 percent, according to a report from Crain’s.

“I’ve never seen a tighter market,” Jeff Marshall, a broker at industrial brokerage Kaplon Belo Affiliates in Long Island City, told Crain’s.

The incursion of retail into former industrial spaces has pinched inventory and lifted rental rates as well. When Beacon’s Closet, a vintage clothing store based in Williamsburg for 11 years, was priced out of its longtime space, the shop inked a deal for 7,500 square feet in a formerly industrial space at 74 Guernsey Street in Greenpoint. The clothier agreed to $40 per square foot in rent — twice what the property would have cost an industrial tenant, Crain’s said.

There is also the fact that as existing industrial space is converted to residential or retail, little new inventory is being added to the market. A 132,000-square-foot building at 145-68 228th Street in Springfield Gardens, Queens, one of few such newcomers, is already 100 percent leased, according to CoStar data cited by Crain’s. [Crain’s]Julie Strickland


Related Articles

arrow_forward_ios
Amazon CEO Jeff Bezos with (top to bottom) 5 Warehouse Lane in Elmsford in Westchester County, 2300 Linden Boulevard in Brooklyn and 1502 Bassett Avenue in the Bronx (Getty; Google Maps)

Amazon inks three warehouse deals for delivery stations

Amazon inks three warehouse deals for delivery stations
2055 Anthony Avenue and 1416 Ferris Place (Google Maps)

Ved Parkash picks up Fordham Heights apartment building

Ved Parkash picks up Fordham Heights apartment building
Craig Solomon

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism
Amazon CEO Jeff Bezos and the Matrix Global Logistics Park in Staten Island (Google Maps; Getty)

Amazon inks huge deal for 975K sf warehouse

Amazon inks huge deal for 975K sf warehouse
Matrix Global Logistics Park site on Staten Island (Matrix Companies, Google Maps, iStock)

Industrial leasing surges in NYC as other sectors flounder

Industrial leasing surges in NYC as other sectors flounder
Investors turn to the cold storage market (Credit: iStock)

Investors heat up cold storage market

Investors heat up cold storage market
From left: 580 Gerard Avenue and buyer Joshua Schuster of Silverback Development, and 437-441 164th Street with buyer Jason Friedland of Westrock Development (Google Maps)

Bronx scores only mid-market deals in past two weeks

Bronx scores only mid-market deals in past two weeks
HelloFresh’s NYC HQ (Courtesy of Industry City, HelloFresh by Eric Laignel)

HelloFresh inks Industry City deal for content studio

HelloFresh inks Industry City deal for content studio
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...