Industrial tenant demand has remained strong in New York City's outer boroughs, according to a recent Colliers market report that analyzed Staten Island, Queens, Brooklyn, and the Bronx, excluding Manhattan. A key factor behind this resilience is a 16.4% increase in leasing activity during the first quarter, reaching 561,743 square feet. Mid-sized lease deals primarily drove this surge, Colliers said.
"Notable activity included Con Edison’s lease for 56,440 square feet at the recently completed Red Hook Logistics Center," the CRE firm wrote.
"In South Queens, KSI Auto Parts signed a lease for 51,324 square feet at 109-15 178th Street, while SpeedX took 52,364 square feet at 184-54 149th Avenue."
Net absorption was negative at -224,738 square feet — but improved significantly from the -851,664 square feet recorded in the fourth quarter. Newly listed space caused the category to remain negative, the report noted.
That came as the availability rate spiked by 50 basis points to 9.4 percent. The highest were in Staten Island and the Bronx, which posted rates of 16.4 percent and 15.1 percent, respectively. The lowest was in Northeast Queens, which was 5.2 percent.
While average asking rents are down 1.2 percent from the previous three months at $27.85 per square foot, they are up 6.7 percent year-over-year and "remain historically high," according to Colliers. Northeast Queens had the highest rents, at $31.75 per square foot, with Staten Island averaging the lowest at $21.13.
"Landlords are offering more generous free rent and tenant improvement allowances, and many are willing to subdivide larger blocks of space to attract smaller users," Colliers said after the pullback of rents for the first quarter.
Perhaps the biggest negative in the first quarter was that sales volume was over $275 million. While Colliers did not reveal what the amount was in the fourth quarter, it did note that the figure in the first three months represented "softening." Smyrna Ready Mix Concrete commanded the biggest purchase in the first quarter in the market with its $60 million acquisition in Flushing, Queens.
Currently, only 1.7 million square feet is under construction in the Outer Boroughs, which is just 1.1 percent of the total inventory. Most of the activity is happening in Northwest Queens, which includes a 682,000-square-foot facility undergoing development from Innovo Property Group.
"The construction pipeline is expected to remain limited in 2025, given ongoing zoning challenges and high capital costs," Colliers predicted.
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