SIOR forecasts continued improvement NY industrial markets.
National highlights contained in the SIOR report include:
* Moderate economic growth and sustained low inflation is reinforcing interest by industrial market investors, while the office market is considered the "hot property type" by pension funds, REITs and life insurers. Industrial property vacancy declined to 7.3 percent, net absorption improved by 2.6 percent, and new construction increased by 22.8 percent. Office property vacancy declined to 13.9 percent, construction activity ruse 26 percent, and Class "A" suburban vacancy decreased 11.1 percent, while Class "A" CBD space remained at 12.8 percent.
New York City industrial and office market highlights include:
* While media production facilities are committing to Manhattan, industrial demand is limited due to continued declines in manufacturing employment. Industrial prices stayed firm, with retail conversions still popular and reported shortages of large blocks of space.
* Upper Manhattan industrial real estate may receive a boost from "Empowerment Zone" designation; industrial supply will continue to be threatened by national "big-box" retailers; and competition with retailers for prime locations could increase lease and sale prices 6 to 10 percent.
* Office vacancies are decreasing in all sub-markets, with an overall Midtown vacancy rate of 12.9 percent versus 18.8 percent for Downtown. Midtown continues to be the desirable location, with higher rents and sale prices for Class "A" space.
* Modest improvement should continue, with increasing multi-media and high-tech firm concentrations offset by increases in sub-lease space from corporate consolidations.
Long Island industrial and office market highlights include:
* Manufacturing sector declines resulted in a significant negative absorption rate, while the area maintained a low industrial vacancy rate of 6.5 percent.
* Increased industrial market activity is anticipated for 1996, with demand growing for warehouse/distribution space. Growth may come from high-tech and computer firms. Low quality jobs and job migration offset office market positives such as declines in unemployment, increases in rents, and increases in sales activity.
* Large, contiguous blocks and Class "A" building space will become more scarce as industrial operations in facilities change to offices.
Brooklyn and Queens industrial and office market highlights include:
* Industrial market vacancy was slightly down to 11.4 percent, with demand concentrated in small firms and big box retailers seeking out large warehouses for discount outlets.
* Industrial sale prices should continue upward trend with sub-market activity by small, start-up entrepreneurs and large employers alike.
* No change in vacancy, small absorption rates, downsizing pressures and shifting tenant types led to some softening in office rental rates.
* Increased interest in the civic center office markets by Manhattan firms could be weakened by anticipated layoffs.
Westchester and Rockland industrial and office market highlights include:
* Industrial demand moderately increased largely due to warehouse/distribution uses with vacancy rates at four percent.
* The national recovery is increasing demand ahead of regional competitors, with a shortage in virtually all sizes of industrial units and little new development in the near future. Bolstered by increasing national profits, the office market has begun to rebound, with net absorption nearly doubling 1994's results and vacancy rates down 1.4 percent.
* With favorable conditions and new tenants in the office market, there is renewed interest by institutional investors.
(The Society of Industrial and Office Realtors (SIOR), founded in 1941, is a professional organization of 1,800 designees, affiliates and associates representing leading industrial and office realtors, investment specialist, and corporate real estate executives. SIOR and Landauer Associates, Inc., a leading international real estate counseling firm, annually publish the Comparative Statistics of Industrial and Office Real Estate Markets, a national and local market review of the industrial and office markets.)
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|Title Annotation:||1996 Comparative Statistics of Industrial and Office Real Estate Markets|
|Publication:||Real Estate Weekly|
|Date:||Jan 31, 1996|
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