Lower Hudson Valley real estate: 2023 saw high demand for industrial, warehouse properties
The commercial real estate market posted mixed results in 2023 across Westchester, Rockland and Putnam counties, with industrial properties in high demand across the region. Offices continue to sit vacant in Westchester, while office and retail leasing grew in Rockland.
Some realtors and brokers felt optimistic at an event hosted by the Hudson Gateway Association of Realtors on Jan. 24, even going so far as to predict that the market could rebound soon.
Here are five takeaways from the panel discussion.
More: Westchester homes sales plunged in 2023, with prices and mortgage rates high
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Demand for industrial properties remains high
Industrial and warehouse properties have been in high demand across the region as e-commerce booms. As inventory remains low in Westchester and Rockland, more developers are seeking to build north in neighboring counties like Putnam and Orange.
In Westchester, only 6% of industrial properties were available in the fourth quarter of 2023 as leasing prices reached the highest ever at $19.06 per square foot.
Sarah Jones-Maturo, president of RM Friedland, said industrial was the only asset type in Westchester that saw sales rise in 2023 because most deals were paid in cash.
In Orange County, industrial was the most active sector in the commercial real estate market, said John Lavelle, associate broker at Rand Commercial. In 2023, there were several 3 million-square-foot industrial properties under construction, with about 80% of the properties already leased.
Office and retail leasing saw biggest growth in Rockland
While office vacancies have continued in Westchester, office leasing saw the biggest growth by 10.5% among other sectors in Rockland.
Adam Gorman, owner of Nova North Commercial, said the number of office leases have gone up, although many businesses are opting for less when it comes to square footage. About 76% of office spaces leased in 2023 were less than 2,000 square feet, he said.
Retail leasing came in second, growing by 5.6% in 2023 with the majority of spaces leased for 2,000 square feet or less. Retail property sales, however, dropped by 45-50% in 2023.
Gorman said sales of retail properties are likely to stay flat unless prices go down.
“Industrial and multifamily are tight markets, we don’t see valuations going down too much,” he said. “But when it comes to sales of retail and office, we’ll start to see those numbers start to come down.”
More on your local market: Westchester's corporate office buildings face a crisis, while medical real estate grows
Outdated office buildings may start dropping out of the market
While remote and hybrid work have kept demand for corporate offices low since the pandemic, quality office buildings remain attractive. Outdated office buildings, however, are in financial distress, some even going into receivership.
Similar trends could happen in Rockland, Gorman said, who predicted outdated office buildings “will start to drop out.”
Recreational developments continue to grow in Putnam and Dutchess
Putnam and Dutchess counties have seen a rapid growth in recreational developments, among a few projects approved recently is an indoor pickleball and golf complex in Poughkeepsie.
Thomas LaPerch, associate broker at HL Commercial, said the demand for medical and storage space is also growing.
Multifamily housing sales plummeted in Westchester
As construction of new apartment buildings continued to boom in 2023 in Westchester, especially in major cities including White Plains, New Rochelle and Yonkers, multifamily properties sales plummeted by 68% compared to 2022.
“That’s insane. It can only get better,” said Jones-Maturo.
Amit Doshi, senior executive managing director at Meridian Capital Group, said the market may rebound when the political climate changes or new legislation gets passed. He said he hopes governments will provide incentives to convert outdated office buildings to multifamily housing developments.
“To me, that’s one bright spot that could happen,” he said. “It may not happen right away, but it will happen.”
Helu Wang covers development and real estate for The Journal News/lohud and USA Today Network. Reach her at hwang@gannett.com.
This article originally appeared on Rockland/Westchester Journal News: Hudson Valley NY saw high demand for industrial properties in 2023
