STAMFORD, CT—At first blush, a suggestion to consider investing in industrial product in a NYC suburb seems like a head scratcher. But in Westchester and Fairfield counties, it can be a better way to go than office, according to CBRE VP Kevin Langtry. He tells GlobeSt.com why that is the case in this EXCLUSIVE interview.
GlobeSt.com: What type of industrial spaces are available in Westchester and Fairfield counties?
Kevin Langtry, CBRE: There's not a lot of modern industrial space in Westchester and Fairfield counties. Supply is tight to begin with and then you have recreational uses, like a cross fit gym, trying to convert the space to what they want, which creates competition with traditional industrial properties. Some of them adapt but other supply goes away because of higher and better uses like retail. But it doesn't matter what it looks like, if it has right ceiling heights and other qualifications, it'll rent. It's a solid investment.
GlobeSt.com: What are the characteristics of buyers in the current market, and what does the area's inventory offer?
Langtry: The typical buyer today isn't from the traditional industrial market, they're more entrepreneurial, regional players who know the area. In Westchester, compared to office, if you take out operating expenses, industrial facilities are netting the same rent as an office property. That's been the case for the last several years but as the downturn hit it's shined a brighter light.
GlobeSt.com: Who are the prospective buyers and how are you helping them navigate Westchester and Fairfield counties' industrial property market?
Langtry: There's a lot of migration from New York City's boroughs into Westchester because the pricing in the boroughs has gotten so high that buyers are spilling over. I've seen a number of situations where someone is looking for an industrial property in multiple local areas, such as Long Island, Rockland County, New Jersey, Westchester/Fairfield and even into Putnam. They were going to touch multiple brokers and it was very inefficient so we [CBRE] came together and formed a tri state industrial group several months back to try and create a one-stop shop. Without that, it's like the wild wild west because several different brokers are pitching one tenant.
GlobeSt.com: Can you talk about rent growth for industrial product in both Westchester and Fairfield Counties?
Langtry: Rents have been pretty steady but climbing a bit. I don't see huge fluctuations, it's pretty easy to get $10 to 11 triple net for a decent or even halfway decent building and I'm even seeing $12 to $14 net-net lease. Tenants with a showroom can afford high end but a straight up distributor can't afford $14. I haven't seen it this high since before the crash, I'd seen some deals in $13 net-net lease range and we're pretty much at that range.
GlobeSt.com: What do you see ahead for the industrial market?
Langtry: We're seeing more requests for new space than ever before, and none of the towns are rezoning for industrial but everyone needs their house fixed and packaged delivered so these businesses have to be somewhere close to residential areas.\
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
