Office & Retail

Upstate New York is currently in a renaissance period as the major initiative of the high technology industry creates momentum for local communities. Centered at the University at Albany, the College of Nanoscale Science and Engineering has been a leader in developing more than $6 billion of infrastructure and research and development focused around the semi-conductor industry, and most recently the solar energy industry. The relocation of Sematech International’s world headquarters from Austin, Texas, to the edge of the University’s campus in Albany, New York, has established a partnership program focusing the world’s leading semi-conductor makers and related industries in a collaborative effort to develop and manufacture the next generation of chips that power our lives. The College’s most recent announcement of a partnership involving IBM, Intel, Samsung, Global Foundries and TSMC focused on a $4.8 billion deal that is largely funded privately, will result in substantial job growth in categories not previously significant in numbers. This most recent announcement in September 2011 also spreads the benefits throughout the state in Buffalo, Rochester, Utica, and into the Hudson Valley as new jobs are created in these communities that result from supporting and related industries.

The office sector should begin to benefit from this surge in space requirements as companies, both existing and startup, begin to absorb the existing vacancies within the market. As the initiative begins to spread its reach further into Upstate New York, we expect to see additional needs for on-campus laboratory space and research-focused facilities. RPI will soon relocate many of its office needs into downtown Troy in the renovation of the former Proctors theater. This re-allocation of the assets of the higher learning facilities will assist in the absorption of all categories of space, but the re-use and redevelopment of existing facilities will dominate those choices, since most of them already have substantial infrastructure in place. This, in turn, will result in creating more demand for housing in locations that have existing standing inventory that can be redeveloped into residential formats that will attract the “boomer” generation back into the cities from the suburbs.

A major solar company has also purchased one of the old IBM chip fab facilities in the Hudson Valley for redevelopment.

The blending of new and old initiatives is leading to a continuum of growth and innovation that will solidify these markets well into the future.

The growth of high-tech industries is creating momentum in the retail market as well. Starting with the second quarter of the year, the level of interest from regional and national retailers looking for locations within the Upstate New York market has been gaining momentum not seen over the last 3 years. Developers are once again beginning to market locations for sites that had been shelved following the downturn in demand for new sites. Developers are finding that tenants within the existing markets are looking for relocation and repositioning opportunities.

The categories that appear to be most active at the present time are the restaurants that are not adequately represented in these markets, certain value-focused retailers like Tuesday Morning or Ocean State Job Lot, and specialty focused operations like regional sleep shops or pet stores.

Shop-Rite recently opened a new supermarket in Niskayuna (Schenectady), New York, and has already announced three more locations under development in the Capital Region. In the case of restaurants, substantial interest has come from quick-serve formats, casual and even higher price point formats like the national steak house retailers and seafood presentations. The more traditional retailers are finding some locational opportunities resulting from the economic downturn’s impact on the market, while others have now realized that certain of these markets are more insulated from the national economic woes than others.

With retail vacancies in most of the markets under 10 percent, and vacancies in the most popular markets being in the low 6 percent range, we are not seeing the decline in rental rates that other markets are experiencing. New retail development in Albany and recent commitments to the western part of the state by retailers not currently represented, are evidence of the level of opportunity that awaits those that realize the stability and resilience of these markets, while positioning themselves to serve the growing populations of high-tech employees and their families.

— Howard Carr, president of The Howard Group/TCN Worldwide

Albany Multifamily


New York’s Capital District is ranked 11 out of the top 25 metro markets in the Northeast (according to REIS), but the area is most certainly making noise in the world of multifamily construction projects. A huge demand in the apartment sector, stemming from technology-based job growth, has forced the hands of local and regional developers to get off the sidelines and start tackling sources for much-needed construction financing to meet the demand. To name of few active developers, Tri City Management, Prime Companies, Capital City Properties, and Albany Partners LLC have a total of more than 1,000 units recently built, under construction, or funded and ready to build in the next 16 months.

Permit filings were up more than 30 percent from 2009 to 2010, indicating a solid trend for new development slated through 2012. Major projects have been popping up all over the region. The Woods, a 60-unit luxury community in suburban Troy, leased up its first few units in May and had 48 of the 60 units rented long before the grand opening in November. One- and two-bedroom unit rents range from $1,100 to $1,490 for 882 to 1194 square feet, averaging roughly $1.50 per square foot according to owner and builder Tri City Management.

Prime Companies’ newest project, Watersview, is a 222-unit luxury community currently under construction in Cohoes just down the road from Prime’s 170-unit Riverwalk complex on the shores of the Hudson River. Watersview was a product of a HUD 221(d) 4 loan for $30 million arranged by Paragon Prime Funding at highly attractive finance rates. Pre-marketing began at the end of September, and the project had deposits on 14 units by the end of October. Official lease up began December 1. Rents, which will average around $1.33 per square foot and range from $1,175 to $1,890, are bolstered by an affiliation with the Marriot Execustay program. “The key to our area is great site selection and strong rental demand from the state employee pool and new tech sector,” says Dean Devito, a principal of Prime Companies.

Capital District Properties (CDP) is expanding its 336-unit luxury apartment community The Paddocks of Saratoga located in Saratoga Springs. The expansion will bring the total count to 420 units. The expansion also includes The Paddocks Sports Club featuring a 2,000-square-foot fitness center, a yoga and exercise studio, tennis courts, basketball court, sundeck and grilling area, as well as a private movie screening room. Simon Wilde, chairman of CDP, had this to say about the growth in the Capital Region: “Running a global business, I have a global perspective of the U.S. and world real estate markets. What is happening in the Capital Region with the massive expenditure on the development of new technology has transformed this market into one of the few bright spots in the United States.” The property expansion will be complete in early summer of 2012. Rent for one-bedroom, two-bedroom and two-bedroom-with-den units range from $1,300 to $1,800 for 895 to 1,454 square feet, averaging around $1.42 per square foot.

Continued positive rent growth of more than 65 percent (according to REIS) for units built after 2009 coupled with solid price-per-square-foot rents and a rapidly expanding tech sector job pool are the key ingredients in a lucrative cocktail that developers want to sip on in this emerging secondary market. The Albany MSA is a hot area to keep an eye on over the next few years as the multifamily construction sector heats up again and is posturing towards a full recovery.

— John Bevilacqua is the New York State director of Multifamily Sales for Coldwell Banker Commercial’s multifamily group. He is based in Albany, New York.

Capital Region Industrial


The Tech Valley Region of New York State stretches from the mid-Hudson Valley all the way through Albany north into Warren and Washington counties. Tech Valley, a moniker often scoffed at in its early days of inception some 10 years ago, is now well recognized as the center of nanotechnology in the United States. Tech writer pundits sometimes call the area “Silicon Valley East” due to its meteoric ascension within the industry.

Global Foundries is in the final phases of constructing and equipping its new $4.5 billion, 1 million-square-foot computer chip manufacturing plant in Malta (Saratoga), New York. It is also building a 250,000-square-foot administration building along side the plant in the Luther Forest Technology Park. While creating some 1,500 jobs during the construction period, it is anticipated that total permanent employment at the project will exceed 2,000 positions.

Further down the road some 20 miles south of Malta at the foot of the Adirondack Northway (NYS I-87), the University at Albany has become the industry epicenter for the research and development of the next generation of computer chips. Within the past 10 years more than 1 million square feet of research and development, labs, and clean rooms have been built on the campus annex making it the R&D home of entities such as IBM, TEL, Applied Materials, ASML and International Sematech, as well as other “next generation” nanotechnology research activities. The rapid expansion has incorporated nearly 3,000 new highly technical and high-paying jobs.

Within the loose boundaries of the Tech Valley Region lies the heart of the more than 60 million-square-foot industrial real estate market of the Capital Region of New York. The June 30 CBRE-Albany Industrial Market Report indicates that the recessionary vacancy levels peaked in 2009 and the most recent rates trended down to a level 10 percent rate.

There are several reasons for the declining vacancy rate. First, a generally (albeit slowly) recovering economy has spurred tenants in the market to stabilize their occupancies. In some cases, like Edgepark Medical Supplies and Railex, tenants have even expanded their square footage. The frenetic pace of “blend and extends” has slowed and tenants are now more often seeking longer terms again to lock in lease rates which are still generally lower than the pre-recession levels. Another factor in increasing occupancy levels has been the virtual lack of new construction, allowing existing holes to fill with increasing demand. A difficult capital market for financing industrial building development combined with a hesitation, or an inability, on the part of developers to invest greater capital to meet lending requirements has kept a lid on new projects. Also contributing to the stabilization of the market has been the increase in demand for space by support and supply vendors to the Global Foundries project. In fact, there are two speculative projects planned for Saratoga County within miles of the Global Foundries complex to meet the expected need for flex space in the 20,000- to 75,000-square-foot range to serve its vendors.

Outside of Global Foundries, the largest industrial transactions in the market in 2011 are the new 300,000-square-foot FedEx facility in Rensselaer County and the purchase of the 200,000-square-foot former Kaz facility in Columbia County by Flanders Corporation.

— Richard P. Sleasman, president and managing director of CBRE-Albany

©2011 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.

Search Property Listings

Requirements for
News Sections

Market Highlights and Snapshots

Editorial Calendar

Today's Real Estate News