Warehouse space in New York City is in an all time high demand, due to the steep increase in online shopping paired with other factors.
According to The Real Deal, “The boom in consumers buying goods online means companies need more space to store all of these goods, with $1 billion in online sales necessitating 1.25 million square feet of industrial space, according to the New York Post. Rents for these spaces are nearing record levels, and foreign purchasers have spent $61 billion on industrial spaces since 2010. Several of the larger warehouse spaces are off I-95 in New Jersey, where vacancy is at 3.9 percent and absorption is at 10 million square feet for the fourth year in a row. In the city itself, Amazon has turned the 7 West 34th Street office building into a local distribution warehouse and leased an 880,000-square-foot industrial building on Staten Island as the “last mile” concept evolves to include an ability to deliver to a customer in less than an hour.”
A ranking by The Real Deal placed Amazon’s arrangement in Staten Island as New York’s biggest new project in 2017.
While warehouse space is usually cheaper in New Jersey, with prices ranging from approximately $5 to $13 per square foot, a lot of money and time are needed to get the goods into the city. This is why many online distributors have a growing interest in obtaining warhouse space within the city’s limits. Apply simple rules of economics, and this increased demand has led to spots in the city going for over $200 per square foot. Industrial neighborhoods like Brooklyn’s Red Hook and Maspeth in Queens are reaping the rewards of this new trend.
The senior vice president of CBRE John Reinertsen told the Post, “Delivering from New Jersey two to three times a day becomes an expensive proposition. That’s why everyone is over here: to get smaller spaces.”
By Mark Snyder