After a weak third quarter, New York City’s industrial market bounced back to end 2022 on a high note.
Tenants leased 1.5 million square feet in the fourth quarter, the Commercial Observer reported. The data came from a CBRE report, which noted the quarter’s leasing activity more than doubled that of the third.
It was the most space leased since the third quarter of 2020. CBRE researcher Brian Klimas thinks industrial leasing will remain strong this year because space is so tight in the city.
“Until we’re fully at an equilibrium with the amount of market space that meets the consumer, I think there’s still going to be a lot of industrial leasing,” Klimas told the publication.
Availability in the market rose marginally from the previous quarter to 6.8 percent. The availability of Class A industrial space went in the opposite direction, however, dropping from 7.5 percent in the third quarter to 6.3 percent in the fourth.
Tenants pre-leased 67 percent of the 5.6 million square feet of Class A and Class B space under construction.
Among the outer boroughs — Manhattan warehouse space is so limited that it isn’t tracked — Brooklyn saw the most leases signed in the fourth quarter: 49 spanning 645,000 industrial square feet, including a 48,000-square-foot lease by ZeroSpace in Gowanus.
Queens ranked second with 28 deals for 460,000 square feet. They included the two biggest contracts of the quarter: a 75,000-square-foot renewal by Standard Motor Products in Long Island City and DB Schenker pre-leasing 83,000 square feet in Springfield Gardens.
The Bronx had four deals and Staten Island had three. Asking rents across the city surged 12 percent year-over-year to $25.06 per square foot.
The industrial market boomed at the start of the pandemic as e-commerce became a lifeline for consumers. The rise in borrowing costs and uncertainty of the economy, however, has threatened to pull the industrial market back from its peak.
— Holden Walter-Warner