Despite Pandemic, NYC's Industrial Market Records Strong Q1

NEW YORK—New York City’s industrial real estate market reported a strong first quarter driven by demand for third-party logistics business space and storage needs for retailers, according to a report by CBRE Group.

Even as the region became the epicenter of the COVID-19 pandemic, quarterly leasing velocity was high at more than 2.8 million square feet and 700,000 square feet of renewals, primarily in warehouse and distribution properties.

The strong market was reflected in rising asking rates. The average asking rent rose by 10.6% quarter-over-quarter to $23.64 per square foot in a triple-net lease. Asking rents increased in all boroughs except for Queens, where rates remained unchanged.

Staten Island recorded the biggest jump quarter-over-quarter in asking rents—30%—due to the leasing of a large, low-priced property in the Mid-Island submarket. Asking rents increased by 9.9% in the Bronx and 2.5% in Brooklyn.

In the sales arena, prices remained stable quarter-over-quarter at $379.61 per square foot. The Bronx had the highest increase in asking price at 11.1% due to increased availabilities in Port Morris and Mott Haven. Queens saw a 4.8% increase in prices due to a decrease in low-priced listings in Woodside and Sunnyside.

Asking sales prices for industrial spaces in Brooklyn remained constant and decreased by 8.3% in Staten Island due to a reduction in availability in the North Shore submarket.

In the leasing sector, new contracts, expansions and renewals totaled nearly 2.86 million square feet, with renewals alone totaling more than 750,000 square feet. Queens was home to the lion’s share of leasing activity with velocity totaling nearly 1.9 million square feet and renewals totaling nearly 600,000 square feet. Amazon took nearly 300,000 square feet in the Middle Village submarket and New York City renewed more than 515,000 square feet at Rentar Plaza. Cine Magic leased more than 60,000 square feet of manufacturing space in Long Island City.

Amazon also leased 450,000 square feet of space in the Matrix Global Logistics Park in the MidIsland submarket of Staten Island.

Brooklyn reported more than 500,000 square feet of leasing, with the majority occurring in the Sunset Park/Greenwood and Canarsie/Flatlands areas.

Overall industrial space availability remained constant quarter-over-quarter at 8.5% while overall vacancy decreased 20 basis points to 5.1%.