The fundamentals for industrial in New York City's outer boroughs are contracting for the most part, aside from the leasing activity.
The worst part of the market that includes the Bronx, Staten Island, Brooklyn and Queens, was the vacancy trend. Cushman & Wakefield's third-quarter report found that the vacancy rate spiked by 120 basis points from the previous three months to 6.2 percent.
"Staten Island posted the largest shift, with vacancy climbing to 16.6% following 975,000 square feet (sf) hitting the market at Matrix Global Logistics Park—its first availability since 2020," the brokerage said.
The issue was supply outweighing demand, with net absorption being -1.7 million square feet in the third quarter.
Also, asking rents declined by $1.24 per square foot to $27.65. This was due to "the addition of lower-cost spaces placing downward pressure on pricing," according to Cushman & Wakefield. Yet, even with the decline, NYC's outer boroughs still average to command the highest industrial rents "by a considerable margin," it added.
Then we get to the one positive — leasing activity — which was 2.6 million square feet in the third quarter, an amount that's already exceeded the total posted in all of 2024. Nearly 90 percent of the leasing was recorded in Queens and Brooklyn. Plus, Cushman called the total the "highest point in recent history."
The largest lease was recorded by Spectrum, which took 200,000 square feet in North Brooklyn. The next largest was Confidential, with a 61,425 square foot signing in Southern Queens, followed by Guang Dong Fuhe Packaging Technology Co. and Mega Aid Pharmacy, which took 55,074 and 50,800 square feet, respectively.
While the development pipeline expanded in the third quarter, that's expected to slow down in the future. This could lead to a drop in the vacancy rate as more space gets absorbed, according to Cushman & Wakefield.
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