NORTHEAST SNAPSHOT, MAY 2005
Albany, New York, Industrial Market
The industrial market in Albany, New York, and the surrounding capital region is picking up steam. Its newfound status as a Northeast distribution hub and growing recognition as a national center for nanotechnology has increased interest and activity in the region. The current demand is for distribution space with a minimum of 24-foot ceilings, one dock per 10,000 square feet, a truck court area with a minimum of 120 feet and ample trailer storage on site, says Richard Sleasman, vice president and principal with CB Richard Ellis-Albany. The area’s status as an emerging industrial center has led to a demand for, and the development of, higher quality product.
Sleasman says that the nanotechnology business has led the local development community to begin preparations for the development of technology parks to meet the anticipated demand of manufacturers and their support systems. “Most older industrial buildings will require rehabilitation or conversion to maintain utilization,” notes Sleasman. “Older buildings near the University of Albany are exploring conversion opportunities to meet the prototype facility of the anticipated nanotechnology demand.”
In addition to the expected increase in technology-based business, Albany has been growing in popularity as a distribution hub as well. “The growth of the big box retail chains in the Northeast has created a strong demand for regional distribution centers to service the new stores,” says Sleasman. “Most new construction is centered around the highway corridors of Interstate 87 and Interstate 90. Target is opening a 1.5 million-square-foot distribution center in Montgomery County at Exit 27 of I-90, while Wal-Mart continues to expand its warehousing in the western end of the market in Fulton and Schoharie counties.”
In the near future, Sleasman sees the I-90 and I-87 corridors remaining the most popular areas for industrial activity, though he believes that the growth will occur further away from metropolitan areas along these routes as larger distribution centers are built to serve more of the Northeast region.
Rental rates for Class A industrial space in the Albany market range from $4.50 to $5.75 per square foot triple-net for properties measuring 25,000 square feet to 50,000 square feet and from $4 to $5 per square foot in the greater-than-50,000-square-feet arena. For older Class B facilities, rents tend to run 20 percent to 25 percent less than Class A space. The vacancy rate is stable, holding at a reasonable 9.72 percent at the end of 2004.
A number of the local municipalities are preparing comprehensive master plans to be better suited to meet the anticipated increase in industrial development in the coming years. Sleasman notes that a number of these communities, while embracing the “clean” manufacturing base as a source of long-term employment in their area, are negative towards welcoming strictly distribution centers due to the heavy truck traffic and relatively few jobs per square foot of development. However, warehouse operations create little stress on school systems, public utilities, police and fire services, and yet they add significantly to the community in property tax revenue. The impending boom in industrial activity, in whichever form it arrives, will only benefit the Albany area in the coming years.
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