M A R K E T B E AT

ECONOMY: Robust eCommerce Sales & Need For Same/Next Day Deliveries Drive the MarketplaceConsumer confidence remained healthy during the winter, backed by online sales trending higher once again—up 16.9% compared to one year ago. Almost $155 billion worth of goods were purchased online, a record high, while consumer demand remained strong within one of the nation’s most affluent and densely populated regions.Transportation and warehousing employment climbed marginally in 2019 by 1.0%.

MARKET OVERVIEW: Healthy Market Conditions Persist Amidst a Strong NYC EconomyDespite being one of the oldest industrial markets in the nation with few modern, Class A warehouse facilities, the New York Outer Boroughs continued to record healthy market conditions throughout 2019. The appetite by traditional warehouse users, eCommerce companies, and logistics companies persisted in one of the largest, most dense consumer markets in the world. More than 3.2 million square feet (msf) was leased within the market in 2019, slightly ahead of the 2018 total. Deals between 50,000 square feet (sf) and 100,000 sf fueled activity in 2019, due largely to the robust demand for last mile delivery and general warehousing facilities. After vacancy marginally ticked higher at midyear, it fell in each of the last two quarters to 4.9%. The rate dipped 10 basis points (bps) within both Brooklyn and Queens during the fourth quarter, while Staten Island had a substantial 700-bp improvement to 3.1% due to the leasing of the newly built 450,000-sf Class A warehouse facility on Gulf Avenue. With existing available space remaining tight, landlords continued to push asking rents higher throughout the fourth quarter. After declining nominally the previous three quarters, the average asking rent climbed 7.3% since the third quarter. Meanwhile, institutional industrial owners have recently become more active in the region with firms such as The Blackstone Group, Prologis, Centerpoint, Seagis, Sitex Group, and Bridge Development all entering the marketplace with purchases.

OUTLOOK: New Warehouse Development Will Continue in 2020, Including Multi-Story WarehousesMore than 1.5 msf of industrial product is currently under development, including a 1.2-msf hub for UPS in Red Hook. The addition of a handful of multi-story facilities in Brooklyn, the Bronx, and Queens will add coveted Class A supply to the marketplace through 2021 as there is more than 2.2 msf of proposed warehouse product slated to break ground imminently. With a limited presence in the area, 3PLs have recently inked significant deals in the boroughs, and are projected to continue to expand in the marketplace going forward. Lastly, those Class A or quality warehouse facilities will continue to secure a premium for rental rates as the market remains tight.

4.9%Vacancy Rate

-64KYTD Net Abs., SF

$19.50Asking Rent, PSF

12-Mo. Forecast

SPACE DEMAND / DELIVERIES OVERALL VACANCY & ASKING RENT

YoY Chg

Overall, Net Asking Rent

NY OUTER BOROUGHSIndustrial Q4 2019

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2016 2017 2018 2019

Milli

ons

(sf)

Net Absorption, SF Construction Completions, SF

4%

5%

6%

7%

8%

$14

$15

$16

$17

$18

$19

$20

Q4 18 Q1 19 Q2 19 Q3 19 Q4 19

Asking Rent, $ PSF Vacancy Rate

Source: BLS

ECONOMIC INDICATORSQ4 2019

4.0%

12-Mo. Forecast

NY Outer BoroughsUnemployment Rate

1.9MNY Outer Boroughs Employment

3.6%U.S. Unemployment Rate

YoY Chg

M A R K E T B E AT

MARKET STATISTICS

NY OUTER BOROUGHSIndustrial Q4 2019

KEY LEASE TRANSACTIONS Q4 2019PROPERTY SF TENANT PROPERTY TYPE SUBMARKET

566 Gulf Avenue 450,000 Confidential Warehouse/Distribution Staten Island

57-47 47th Street 75,313 Laser Shipping Warehouse/Distribution Western Queens

88-36 77th Avenue 63,383 CDL Last Mile Solutions Warehouse/Distribution Western Queens

145-68 228th Street 62,657 Apex Logistics International* Warehouse/Distribution Southern Queens

*Includes renewal

KEY SALES TRANSACTIONS Q4 2019PROPERTY SF SELLER/BUYER PRICE/$PSF

511 Barry Street, Bronx 140,000 Baldor Specialty Foods / Innovo Property Group $54.3M / $387.50

780 East 135th Street, Bronx 92,446 Altmark Group / Klosed Properties $17.5M / $189.30

19-26-19-40 Hazen Street, East Elmhurst 78,068 Safe Art Sat Inc. / David Zwimer Inc. $12.0M / $153.71

535 Zerega Avenue, Bronx 70,000 Simone Development Company / The Blackstone Group $28.5M / $407.14

NOTABLE PROJECTS UNDER CONSTRUCTIONPROPERTY SF DEVELOPER MAJOR TENANT SUBMARKET

68 Ferris Street 1,200,000 Est4te Four Capital UPS South Brooklyn

12555-12595 Flatlands Avenue 193,800 Wildflower Ltd Speculative East Brooklyn

55 Bay Street 83,000 DH Property Holdings Speculative North Brooklyn

1427 Ralph Avenue 48,000 Harris Litwak Speculative East Brooklyn

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATIONCushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.

©2020 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

JASON PRICEDirector—Tri-State Industrial Researchjason.price@cushwake.com

HT = High Technology/Flex W/D = Warehouse/Distribution

SUBMARKET TOTAL BLDGS

INVENTORY (SF)

YTD LEASING ACTIVITY

(SF)

YTD USER SALE ACTIVITY

(SF)

OVERALL VACANCY

RATE

YTD NET OVERALL

ABSOPRTION (SF)

UNDER CNSTR (SF)

NEW CNSTR (SF)

OVERALL WEIGHTED AVG. NET RENT (HT)

OVERALL WEIGHTED AVG. NET RENT (W/D)

Bronx 259 18,966,042 795,660 25,000 5.4% -123,400 0 0 $9.49 $17.06

Brooklyn 797 52,207,662 895,319 373,000 4.8% -533,715 1,524,800 0 $10.08 $19.94

Queens 818 57,583,305 987,439 218,068 5.1% 102,989 0 0 $11.74 $19.65

Staten Island 47 6,441,224 501,000 0 3.1% 490,000 0 450,000 $7.73 $13.59

NY BOROUGHS TOTAL 1,921 135,198,233 3,179,418 616,068 4.9% -64,126 1,524,800 450,000 $9.04 $18.88 *Rental rates reflect weighted net asking $psf/year **Leasing activity totals do not include renewals