In his 40 years in commercial real estate in the Capital Region, Richard Sleasman says he has never seen the vacancy rate for industrial space as low as it is right now.
CBRE-Albany, where Sleasman serves as president, calculated the first-half vacancy rate at 2% for an area stretching from Albany, Saratoga, Schenectady and Rensselaer counties north to Warren County, south to Columbia County and west to Fulton and Montgomery counties.
That’s half the rate seen in the January-to-June period just two years ago, and down from 2.7% in late 2020, according to the industrial market report CBRE-Albany released last month.
The current 2% rate is a record, “never hit” in the history of CBRE-Albany and its predecessor, which dates to 1979, Sleasman said.
The report also pegs asking lease rates at new highs: $7.43 per square foot in Saratoga County, for instance. In contrast to today’s rates, $6 a square foot, which “was a wild number” when first seen five or so years ago, Sleasman said.
The records are not unique to the region, though; they are “pervasive everywhere” in the country, he said.
Some of that has to do with demand: “Industrial” encompasses not only light and heavy manufacturing space, but warehouses used for distribution and fulfillment that companies nowadays find necessary to meet the growing online appetite of consumers.
We see that locally in the likes of Amazon, which opened a 1 million-square-foot fulfillment center in Rensselaer County last year. The online giant also has its sights on two other big warehouse spaces in the area, and has tucked smaller facilities around the region – all to service various stages in its delivery network.
While Amazon’s need for space may make the headlines, Sleasman said industrial demand locally is also seen from so-called 3PLs – third-party logistics companies that move other firms’ goods – and smaller suppliers of home items like plumbing, building and lighting materials.
The flip side to low vacancy, though, is the perception that there isn’t any space available. Bigger metro areas easily counter that with national developers willing to build “on spec” – on speculation, without a tenant in hand.
But our developers are home-grown and generally more conservative. Sleasman noted, however, that Galesi Group in Schenectady and Rosetti Development in Colonie have dipped a toe in the spec water to propose buildings without a full complement of tenants – which they subsequently signed before construction was completed.
Sleasman said “adaptive reuse” also can add to available space, as older buildings formerly not in demand or buildings constructed for other purposes are redeveloped.
He pointed to the former Sportsplex of Halfmoon, built off Route 9 to offer indoor playing fields, which was expanded and opened last month as the new headquarters and factory of robotics maker Precision Valve & Automation, which relocated just a few miles north from Colonie.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]