NYC’s Evolving Superregional Industrial Market
The term “megalopolis” has been around for more than a century. In 2020, someone may need to coin a comparable term specific to industrial submarkets, because the network of locations serving the New York metropolitan area now extends well beyond the boundaries of the metro area.
Historically, says NKF, “distributors trying to service the New York metropolitan area focused on a couple of key locations, including Northern and Central New Jersey as well as Pennsylvania’s Lehigh Valley.” That market is now expanding due to the growth of e-commerce, “which is driving an unprecedented boom in demand for industrial space. New York’s outer boroughs and Long Island, Southern New Jersey, Central Pennsylvania, Connecticut and Albany are becoming strategic points in the evolving superregional industrial market.”
Driving this expansion is low availability in the core markets, along with rising rents, according to NKF’s report. That’s leading to the rise of industrial nodes in outlying areas. Conversely, consumer expectations of rapid delivery spur demand for warehouses in urban and inner suburban areas, “which until recently lacked modern industrial inventory and institutional investment.”
Where industrial development occurs within the superregion depends on the product’s end use; it’s not a one-size-fits-all proposition. “Rents are highest in New York City and immediately surrounding areas in Northern New Jersey and Long Island,” NKF says. “Occupiers that locate in these submarkets are paying more for proximity to population centers where goods are delivered to consumers and labor is most abundant.”
At the other end of the spectrum, says NKF, “larger-scale distribution and cost-sensitive operations tend to locate in the less-expensive Lehigh Valley and Southern New Jersey markets.”
Along this continuum, Hartford and New Haven, CT to the New York metro area’s, along with Albany well north of the city, are up-and-coming industrial clusters that have expanded over the past couple of years. Both the New Haven and Albany areas are or soon will be home to big-box Amazon fulfillment centers, for example,
Meanwhile, the reach of the Central Pennsylvania market—second only to Central New Jersey for industrial completions over the past five years—extends beyond that of the New York metropolitan area, NKF says. With 25 million square feet of inventory added in the past few years, Central Pennsylvania now serves as “a major distribution hub for the entire Eastern half of the country.”
For comments, questions or concerns, please contact Paul Bubny
- ◦Development
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