Industrial availability has come full circle in New York (state), with the active industrial pipeline pushing the availability rate above 9%, a figure that has not been observed since 2014. This is actually healthy for the market and is slightly north of historic “equilibrium”.
The availability rate has increased for eight consecutive quarters, fueled by the 13 million square feet of new construction completed within New York last year, which surpassed the previous record-high set in 2018. About 5 million square feet of new construction has been completed thus far in 2024 alone.
While tenant demand remains, it has been easily outpaced by the addition of new supply. Industrial buildings constructed since the start of 2023 sport an availability rate of 51%, with 8.9 million square feet being actively marketed now. Barring a reversal in leasing activity, the amount of available space in recently completed buildings will likely increase as about 18 million square feet is still under construction.
New York’s overall availability rate will likely increase until the end of the year, as about 12 million square feet of new construction is forecast to be completed by then. Beyond this year, however, the rate of increase is likely to slow as the amount of new construction starts has decreased for five consecutive quarters.
This trend has been ongoing across the U.S. industrial sector, according to a recent CoStar analysis, which found early 2024 data indicating “the number of projects finishing construction has begun to decline. Within the 87 markets that comprise CoStar’s National Index, 106 million square feet of industrial property developments were completed during the first quarter of 2024, down 30% from the previous quarter and the lowest amount under construction in 18 months.”
