Western New York Industrial Real Estate Market Overview, January 2021
The severe mismatch between supply and demand continues into the New Year: supply remains very limited.
2020 industrial transactions of note:
41,800 sf industrial fabrication facility sold in North Tonawanda to international company expanding and consolidating its local operations. Completed marketing assignment.
Food packaging company from Midwest US leased 90,000 sf
30,000 sf industrial warehouse leased to expanding local company. Completed marketing assignment.
20,000 sf lease in Cheektowaga to niche market wholesale operation, tripling its size. Completed marketing assignment.
57,000 sf fabrication building in Tonawanda, deal closed to a growing local company. Completed marketing assignment.
31,000 sf food grade warehouse leased to food processor
Growing Canadian distributor in Cheektowaga increased its capacity by 40% to 98,000 sf. Completed marketing assignment.
Plastics company leased 70,000 sf warehouse. Completed marketing assignment.
Pending sale of 54,000 sf industrial fabrication facility, marketing assignment.
As of this writing, there are fewer tenants and buyers in the market, but they are finding an ever-shrinking inventory of options. Lease rates and sale prices remained at historic highs through December 2020, likely will plateau in 2021. Deals continued to close, and new leases and acquisitions were contracted during this challenging period. What is next?
Expansions by local manufacturers and distributors are the key drivers.
Inventory remains more limited than the number of prospects seeking space solutions. There is a limited amount of planned speculative industrial construction.
Will supply of space increase due to closures? There is growing uncertainty and some are asking of themselves and about others: “who will make it?” The solid sectors include: food processing, fabrication, pharmaceuticals, e-commerce, chemical companies, and general distribution.
The following factors combine to suggest valuations in the industrial are very unlikely to drop, unless a severe and long manufacturing crisis ensues:
How can a buyer or tenant find solutions when supply is so very limited? Signs and internet postings only show some of what is available. What might become available down the road? What will be available in the near to mid-term? The process requires best possible information and a willingness, and ability, to effectively and accurately research the targeted submarkets.
Leasing, renewals, contraction, and expansion require strategic planning and the best possible tactical steps. Lease recasting, blend and extend, and market-driven renewals assure best possible agreements for both parties. Landlords and tenants are in the same boat: both want to stay afloat.
For specifics about your real estate requirements locally, regionally, nationally, or internationally, call me for a confidential, no-obligations meeting.
David Schiller SIOR
Associate Real Estate Broker
Cushman & Wakefield/Pyramid Brokerage Company of Buffalo