By: Mike Mustiglione
The amount of square feet devoted to warehouses across New York City is expanding rapidly, new research shows.
Driven by e-commerce firms like Amazon and others, the growth has been breathtaking. A report prepared by B6 Real Estate Advisors, outlined recently by The Wall Street Journal, showed that sales volume for industrial buildings is up 145% from this time in 2016, with total sales expected to reach $2.4 billion this year across 214 transactions.
“Industrial space is thriving in a year when investment in other sectors—such as multifamily buildings and retail—has cooled, the report found. Retail sales volume is expected to drop 64% from 2012 totals,” reported Crain’s New York Business. “Industrial buildings sold for an average of $414 per square foot during the third quarter, according to B6 Real Estate Advisors, compared with about $300 per square foot during the same period in 2015.”
“Industrial’s sudden rise is evidence that the ambitions of online retailers are having a dramatic impact on the investment market,” a summary of the B6 report pointed out.
“Amazon leased a nearly million-square-foot warehouse in Staten Island last year for a distribution center and earlier this year leased more than 100,000 square feet in the Bronx. The company has considered leasing significant blocks of warehouse space in both Queens and Brooklyn, Crain’s reported in the summer,” Crain’s reported.
Paul Massey, the CEO of B6, said in an interview with the Wall Street Journal that firms’ “desire to solve for that last-mile element has radically turned around the appetite for those buildings.”
Alternative asset manager Blackstone reportedly increased its portfolio in June by 100$ by paying $18.7 billion deal for 179 million square feet worth of warehouses here in the United States and other countries.
But all the activity is taking a toll. Delivering orders from the internet has meant that “the very fabric of major urban areas around the world is being transformed,” the New York Times recently reported. “And New York City, where more than 1.5 million packages are delivered daily, shows the impact that this push for convenience is having on gridlock, roadway safety and pollution. Delivery trucks operated by UPS and FedEx double-park on streets and block bus and bike lanes. They racked up more than 471,000 parking violations last year, a 34 percent increase from 2013.”
The Times went further, pointing out that the “main entryway for packages into New York City, leading to the George Washington Bridge from New Jersey, has become the most congested interchange in the country. Trucks heading toward the bridge travel at 23 miles per hour, down from 30 m.p.h. five years ago.”