A surge in online shopping is contributing to a surge in demand for New York City warehouse space.
The boom in consumers buying goods online means companies need more space to store all of these goods, with $1 billion in online sales necessitating 1.25 million square feet of industrial space, according to the New York Post. Rents for these spaces are nearing record levels, and foreign purchasers have spent $61 billion on industrial spaces since 2010.
Several of the larger warehouse spaces are off I-95 in New Jersey, where vacancy is at 3.9 percent and absorption is at 10 million square feet for the fourth year in a row. In the city itself, Amazon has turned the 7 West 34th Street office building into a local distribution warehouse and leased an 880,000-square-foot industrial building on Staten Island as the “last mile” concept evolves to include an ability to deliver to a customer in less than an hour.
Amazon’s Staten Island deal was the largest new project of 2017 for New York, according to a ranking from The Real Deal.
Warehouse space in New Jersey is generally cheaper at about $5 to $13 per square foot, but getting the packages into the city can take a lot of time and money. This has led to greater interest in the city’s warehouse space, where some spots can go for more than $200 per square foot. Neighborhoods such as Red Hook and Maspeth are reaping the fruits of this popularity.
“Delivering from New Jersey two to three times a day becomes an expensive proposition,” senior vice president of CBRE John Reinertsen told the Post. “That’s why everyone is over here: to get smaller spaces.” [NYP] – Eddie Small