A bar graph in the latest report from commercial real estate broker CBRE-Albany shows a steady drop in the overall vacancy rate for industrial buildings in the region.
From about 9 percent in the second half of 2014, the rate declined to 3.5 percent by the end of last year. In some individual counties, it was even lower: 2.5 percent in Saratoga, 1.7 percent in Albany, and an astounding 0.9 percent in Rensselaer.
That latter number meant that just 23,000 square feet of existing warehouse/manufacturing space was unoccupied in that county at year’s end.
But how low is too low? At what point does an area become unattractive because there is too little industrial space available?
We’re pretty close to being there now.
“Not much below that 3.5 or 3 percent,” Dan Simpson said when I posed the question to him. Simpson, an associate broker at CBRE-Albany who specializes in the industrial market, didn’t sound concerned, though.
He explained that getting supply and demand to align was a “very tricky balance” — too much vacant space pushed down lease prices and too little made it “difficult to react quickly” when prospective tenants came calling.
Smart developers, though, always have “something in their pocket” — land with needed municipal approvals that can be shown to a serious tenant, Simpson said.
And while the Capital Region is not big on speculative building — erecting structures without signed tenants — there is a bit available here and there, he added.
The CBRE-Albany semi-annual market report, released last week, put total industrial space in the 10-county region at 62.7 million square feet at year’s end: up about 82,000 square feet from the June report.
The firm, which surveys single-story post-World War II buildings with at least 10,000 square feet, said much of the new space came from additions made to existing buildings.
The report noted, for instance, the 20,000 square feet added to J.W. Danforth’s 60,000- square-foot warehouse near Northway Exit 10 in Halfmoon. The suburban Buffalo mechanical contractor, which has done work at GlobalFoundries, bought the warehouse in 2015 to give it a Capital Region location.
While growth nationally in e-commerce has pushed development of new, higher-ceiling distribution warehouses in major markets, we see little demand for that here. But Simpson said that doesn’t mean e-commerce has no presence locally.
He said so-called “last mile couriers” — companies making deliveries for big-box businesses — have been seeking out space in the area for the last couple of years.
“They’re here; they’re quiet,” he said. The couriers don’t need a lot of square footage, but want buildings with many dock doors.
Loading space — dock-level or grade-level — is one of the “Big 3” in warehouse/manufacturing, Simpson said. The other two are ceiling height and distance to highways.
We excel on the latter, he said, with a “fantastic road system” of interstates.
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].