Lincoln Equities, PCCP Pick Up $54M New York Industrial Portfolio

A joint venture between Lincoln Equities and PCCP has acquired a three-building value-add industrial portfolio in Valley Cottage, New York, for $53.5 million from sellers Sasson Real Estate Group and Garelick Holdco LLC. The portfolio totals 260,000 square feet and was fully leased at the time of the sale.

The Valley Cottage portfolio is leased to a mix of 24 tenants and features 20-foot to 26-foot clear heights, 18 dock doors, 22 drive-in doors and 28% office finish. The property accommodates a light industrial usage. The assets are located 30 miles north of Midtown Manhattan in the Northern New Jersey industrial submarket.

The transaction highlights the deep demand for industrial product due to the global pandemic, according to the JLL senior managing director Jose Cruz, who represented the sellers in the transaction along with senior director Marc Duval, director Jordan Avanzato, associate Ryan Robertson and senior managing director Andrew Scandalios. The portfolio also included a 23-acre development parcel, which enhanced the appeal for the deal.

Leasing demand is driving the attractive market fundamentals. According to CBRE’s NYC Industrial MarketView, leasing activity in the New York area totaled 870,000 square feet in the first quarter, including one major lease commitment from an e-commerce company. The activity would likely have been higher if not for a lack of available big box, class-A space, which hindered leasing transactions. As a result, the vacancy rate was unchanged from the previous quarter at 8.2% and average asking rents fell a nominal 1.1% to $22.31 per square foot. Isolating for class-A industrial space, the availability rate is 1.9%.

Although leasing activity was curbed by the limited availability, industrial investment in New York City increased 15.8% over the previous quarter, according to the CBRE report, with a 22 investment deals totaling 530,000 square feet. However, the average sales price decreased 4.4% over the previous quarter to $337.97 per square foot. Sales prices are also down a significant 11% year over year, illustrating the impact of the pandemic. The 22 deals in the first quarter totaled $232 million.

The strong industrial investment activity is especially impressive when measured against the market’s overall transaction volume. According to a report from Cushman & Wakefield, investment activity in New York City fell 50% in 2020, totaling $22.1 billion across asset classes. Industrial and multifamily assets drove transaction activity last year, and have continued to be the drivers in early 2021.