NORTHEAST SNAPSHOT, FEBRUARY 2009
Syracuse Industrial Market
While the Syracuse industrial market appears to be doing just fine right now, the market is not immune to the current recession.
“We’re not having a lot of foreclosures. We’re not having a lot of banks in trouble, but the availability of cash is still an issue. How much you have to put down and the terms are still issues,” says Mark Rupprecht, CCIM, a senior broker with the Syracuse office of CB Richard Ellis.
On the brokerage side, the fall of 2008 saw many people putting off decisions because of the economic uncertainty. By the end of the year, though, there was a flurry of activity, as people realized that the downturn may last longer than they thought and deals needed to get done as soon as possible. This led to CBRE Syracuse posting yet another record year, its third in the last four years. New construction also did well in Syracuse.
“We’ve had nice projects in the past year in Suburban West, Suburban East and Suburban North,” Rupprecht says.
In Syracuse’s Suburban North submarket, more than 900,000 square feet of new industrial product has been built in the past 2 years, including a 600,000-square-foot facility for furniture maker Raymour & Flanigan that brings its total to 1 million square feet of space in the submarket.
The Suburban West submarket has seen nearly 200,000 square feet built, mostly split between Tessy Plastics’ 40,000-square-foot addition to its Elbridge facility and Welchallyn’s new 124,000-square-foot world headquarters in Skaneateles, which is also applying for LEED certification.
In the Suburban West submarket, more than 300,000 square feet has been built, including a facility in Salina for Southern Wine & Spirits and a facility for Federal Express in DeWitt.
Once the last of these projects currently under construction — including Tessy Plastics, Welchallyn and Federal Express — are complete, there will be a significant slowdown in new construction.
“I don’t hear people talking about new projects of this size right now,” Rupprecht says. “I certainly believe there will be new construction [in the future], but it’s been a very good two years for us. It’s going to be very hard to match that in this environment.”
Industrial development in Syracuse up until now has consisted of existing companies building a new facility on a greenfield site when they outgrew their current building, mostly due to historically low vacancy rates, which averaged 5 percent. Now, the market is seeing the downside of that, as many of the properties tenants vacated for new, state-of-the-art facilities are lying vacant. Rupprecht sees a dramatic increase in vacancy rates because of this, and the current real estate climate will only prolong the recovery.
— Coleman Wood
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