NORTHEAST SNAPSHOT, JUNE 2005
Syracuse, New York Office Market
The Syracuse, New York, office market is currently in a state of transition. The city is in the process of adapting from a manufacturing environment to a globally competitive service environment, says Eric Paparo, associate broker in the office and industrial division of Syracuse-based NAI Pyramid Brokerage. “Syracuse is now being recognized by major global corporations as a valuable resource for customer service, sales and redundant systems compliance,” says Paparo. “The city is experiencing one of the largest engineering and research talent searches this area has ever faced.”
Major companies such as Bank of New York, Lockheed-Martin and AXA have committed to space in the Syracuse area and are hiring in large numbers. “The newly constructed incubator center on Harrison Street is designed to encourage start-up and smaller companies in research and development to locate in Syracuse. The Syracuse office market is adapting to these types of companies that could prove to be the wave of the future [for this market],” he adds. With security concerns now on the minds of many companies in major markets like New York City, Boston and Toronto, Syracuse is becoming a viable location in which these companies can install redundant environments as a precaution.
The most significant development underway in the area is the DestiNY Research Park, a 300-acre project underway on Interstate 81 in Saline, just outside of Syracuse. The first, 1 million-square-foot building will break ground this year and will house firms involved in the design and development of technologies for use at the DestiNY USA mixed-use complex and worldwide. Major areas of research to be undertaken at the office park include renewable energy, technology and security products. “The 1 million-square-foot project is the catalyst to the multi-billion dollar expansion and creation of the DestiNY retail/entertainment complex in and around Syracuse in Onondaga County,” explains Paparo. Onondaga County is also moving forward with the construction of the $65 million convention center/hotel project planned for downtown.
As new office projects crop up in the growing Syracuse market, Paparo notes that a number of older, underutilized commercial properties are finding new life through redevelopment to residential use. He expects this renewed interest in the downtown housing market to spark increased interest in the central business district (CBD) from service-oriented companies. Much of the quality office space available is being absorbed, with Bank of New York taking over a significant block of the vacated Niagara Mohawk office space on Salina Street. VIP Structures is redeveloping another Niagara Mohawk office location into a medical office property. The Sutherland Group has consolidated locations and expanded into the Galleries complex on Warren Street.
The growing market’s CBD has already experienced increased activity. “Syracuse is expanding from the center out,” says Paparo. “Downtown is experiencing several expansions and is planning for increased development in the CBD.”
The vacancy rate is currently holding at approximately 12 percent. Rental rates range from $16.50 to $24 per leasable square foot. Paparo notes that these rates typically include taxes, insurance, maintenance and janitorial expenses.
A majority of the development is occurring just north of the city, including the DestiNY developments and the Electronics Business Park where Lockheed-Martin is headquartered. The east and west markets are experiencing tremendous residential and retail developments that will eventually create a need for service-related office requirements.
In the future, the $9 billion DestiNY USA project should ignite a series of developments on the north end of the city. The proposed $230 million Inner Harbor project will connect the proposed DestiNY USA project to the former manufacturing-turned-office-and-residential Franklin Square neighborhood that borders the CBD. This area will likely be a magnet for research and development companies, and also attract businesses that service the R&D field, such as law and accounting firms.
“Syracuse is strategically prepared to absorb the increased interest in the area from major corporations and families looking for an exciting place to live, work and play,” says Paparo. The Federal Empowerment Zones, New York State Empire Zones, a large existing workforce, a solid infrastructure of non-congested highways and an airport supported by major carriers are a few of the tools in place to help attract national and global companies to the up-and-coming Syracuse market.
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