The need for warehouse space was strong at the beginning of 2020. With e-commerce on the rise, a warehouse is a necessary space. Amazon obtained new property in New York so they can better supply its customers in the area, and many businesses are following this formula.
The average rent for space climbed 10.6% from the end of last year, up to $23.64 per square foot.
Many of the major deals, including Amazon, were signed before Covid-19 hit. Any other deals in the middle of negotiation to sell or buy were put on immediate hold. However, Crain’s New York is reporting that the demand from e-commerce companies is still high, and the sector could rebound quickly.
"We are not getting many people walking away entirely," said John Reinertsen, a CBRE senior vice president. "Just that they can't sign today.”
Market analysis from CBRE indicates that brokers are optimistic the demand will return, as the e-commerce industry continues to thrive. Most residents are dependent on shipped goods during the Covid era. Companies like Blue Apron, a what was struggling meal-kit service, is now “overwhelmed by demand.”
Before the pandemic, the vacancy rate for roughly 137 million square feet of industrial space in the city dropped to 5%.
There were eight warehouses under construction before the virus hit. All of the projects were put on hold until at least May 15. Once Governor Andrew Cuomo deems it safe to continue construction, you can bet that those properties will sell fast.
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To read the full story in Crain’s New York, click here: https://www.crainsnewyork.com/real-estate/warehouse-leases-poised-strong-rebound-due-boost-ecommerce
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