{"id":20494,"date":"2025-10-28T22:40:14","date_gmt":"2025-10-28T22:40:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/20494\/"},"modified":"2025-10-28T22:40:14","modified_gmt":"2025-10-28T22:40:14","slug":"with-rents-down-and-vacancy-up-tri-state-industrial-owners-go-small","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/20494\/","title":{"rendered":"With Rents Down And Vacancy Up, Tri-State Industrial Owners Go Small"},"content":{"rendered":"

Thor Equities<\/a>\u2019 230K SF industrial facility in Passaic, New Jersey, was once more than 25% larger than it is today, but after acquiring the property at 153 Linden St. in 2022, the developer decided to chop 70K SF of the building off.<\/p>\n

\"Placeholder\"\/<\/p>\n

\n Demand from third-party logistics tenants made up 32% and 26% of second- and third-quarter leasing activity, respectively.\n <\/p>\n

It may seem counterintuitive to maximizing a building’s income potential, but doing so made room for new docks and parking and allowed the developer to bring in two tenants instead of one.<\/p>\n

\u201cGeorge, who does our leasing here, he would like to divide this into four if he could, because that\u2019s where the demand is,\u201d Thor Executive Vice President Peter McEneaney said onstage at Bisnow\u2019s Northeast Industrial and Logistics Conference, held last week at 153 Linden.\u00a0<\/p>\n

For years, developers have built colossal warehouses that could attract the likes of Amazon,<\/a>\u00a0Home Depot and Target<\/a>. Such big-box tenants needed as much square footage as possible to ship\u00a0goods to the nearly 24 million people living in the New York Tri-State area.\u00a0<\/p>\n

Overlooked were smaller tenants, anyone from local auto repair shops to modest third-party logistics providers. Such companies were already expanding operations following the pandemic-related e-commerce<\/a> boom and have more recently been inundated with business since President Donald Trump\u2019s tariffs<\/a> were implemented, according to Kearney\u2019s\u00a02025 state of logistics report<\/a>.<\/p>\n

Those factors are \u201cpushing 3PLs to move beyond intermodal logistics and invest in regional hubs and last-mile delivery networks,\u201d the report says.<\/p>\n

\"Placeholder\"\/<\/p>\n

\n Bisnow\/Remi Karp\n <\/p>\n

\n Pivot Energy’s Remi Mignott, Bluewater Property Group’s Christina Bernardin, Arco Design\/Build’s Jim Wyatt, Raise The Roof Logistics’ Rob Marek, Thor Equities’ Peter McEneaney and Premier Design + Build Group’s Jason Hart\n <\/p>\n

Demand from 3PLs made up 32% and 26% of second- and third-quarter leasing activity, respectively, according to\u00a0CBRE<\/a>.\u00a0<\/p>\n

The\u00a0trend is reflected nationally. Megawarehouse leases \u2014 those 1M SF and larger \u2014 accounted for 13 of the top 100 leases signed in the first half of the year, compared to 31 during the same period last year. 3PLs inked 38 of the leases on that list, up from 28, according to\u00a0another CBRE report<\/a>.<\/p>\n

The average lease size among the largest 100 deals signed dropped to 718K SF from 814K SF a year earlier.<\/p>\n

But small-bay tenants operate differently than the industrial beasts with massive footprints, making it a harder space to navigate for landlords and nearly impossible to retrofit warehouses originally designed for a single tenant.<\/p>\n

\u201cWe’re really the apartments of industrial,\u201d Doors and Spaces Industrial Managing Partner Brian Whitmer.\u00a0<\/p>\n

Tenants have short windows between leasing and moving in, making it difficult to prelease a building, Whitmer said.<\/p>\n

\"Placeholder\"\/<\/p>\n

\n Bisnow\/Sasha Jones\n <\/p>\n

\n Trammell Crow Co.’s Andrew Mele, Realterm’s Nick Dupuis, Prologis’ Read Mortimer, Brookfield’s Tyler Mordas and Citrin Cooperman’s James Catalano\n <\/p>\n

Plus, the space has to be flexible. Some tenants want swing space, others may ask for a retail storefront. Needs for offices, docks and racks can also vary.\u00a0<\/p>\n

Given rapidly fluctuating tariffs and resulting market uncertainty, 3PLs have brought with them even more requirements.<\/p>\n

\u201cWhat we’ve seen is a lot of tenants who want the cheapest space they can get for the shortest term with the most [tenant improvement],\u201d\u00a0Trammell Crow Co<\/a>. Senior Managing Director Andrew Mele said during the event. \u201cPeriod. Full stop.\u201d<\/p>\n

\"Placeholder\"\/<\/p>\n

\n Bisnow\/Sasha Jones\n <\/p>\n

\n Nexamp’s Felix Aguayo, Deugen Developments’ Eric Gormeley, RL Cold’s Zach Romano, the Port Authority of New York and New Jersey’s Amanda Valdes, Doors and Spaces’ Brian Whitmer and Greek Real Estate Partners’ Matt Schlindwein\n <\/p>\n

The CBRE report\u00a0says that while free rent and attractive TI packages began to pick up in mid-2023, when a glut of new industrial space came online, landlords only more recently have begun to concede on rents.\u00a0<\/p>\n

In the third quarter, average asking rent in the Northeast fell by 1.7% year-over-year. While the Philadelphia metro had gains of 4% in that time, northern and central New Jersey saw year-over-year dips of 6% and 3%, respectively, according to the report.<\/p>\n

The vacancy rate in the Northeast stands at just under 8% as of the third quarter,\u00a0which was the 14th consecutive quarter that percentage has ticked up.<\/p>\n

Construction completions totaled 3.8M SF in the third quarter, and there\u2019s still another 28M SF in the pipeline. Meanwhile, small-bay tenants, who operate in shorter time frames, are getting antsy over construction timelines that keep lengthening.<\/p>\n

\u201cSpeed to market is still king,\u201d McEneaney said. \u201cWe’re all trying to deliver it as fast as possible, because that helps our IRR, it helps returns and it helps us exit quickly at the end of the day.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Thor Equities\u2019 230K SF industrial facility in Passaic, New Jersey, was once more than 25% larger than it…\n","protected":false},"author":2,"featured_media":20495,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[13843,13842,1503,13845,12849,9,11,10,13844,2083,13840,13841],"class_list":{"0":"post-20494","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york","8":"tag-andrew-mele","9":"tag-brian-whitmer","10":"tag-cbre","11":"tag-doors-and-spaces-industrial","12":"tag-kearney","13":"tag-new-york","14":"tag-new-york-headlines","15":"tag-new-york-news","16":"tag-peter-mceneaney","17":"tag-tariffs","18":"tag-thor-equities","19":"tag-trammell-crow-co"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/20494","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=20494"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/20494\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/20495"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=20494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=20494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=20494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}