The Lower Hudson Valley real estate market in 2023 experienced mixed outcomes across Westchester, Rockland, and Putnam counties. However, there was a significant surge in demand for industrial properties throughout the region. While office vacancies remained high in Westchester, office and retail leasing saw growth in Rockland. At a recent event hosted by the Hudson Gateway Association of Realtors, industry professionals expressed optimism, with some predicting a potential market rebound. Here are five key takeaways from the panel discussion.
Demand for Industrial Properties Remains High
E-commerce has been booming, leading to increased demand for industrial and warehouse spaces across the Lower Hudson Valley. As inventory levels in Westchester and Rockland remain low, developers are now turning to neighboring counties like Putnam and Orange to build new properties. In Westchester, the availability of industrial properties in the fourth quarter of 2023 stood at only 6%, with leasing prices reaching an all-time high of $19.06 per square foot. Sarah Jones-Maturo, president of RM Friedland, noted that industrial properties were the only asset type in Westchester that experienced sales growth in 2023, largely due to cash transactions. In Orange County, the industrial sector was the most active in the commercial real estate market, with several major industrial properties under construction, 80% of which were already leased.
Image: Industrial Warehouse
Office and Retail Leasing Showed Significant Growth in Rockland
While Westchester continued to face office vacancies, Rockland witnessed a remarkable growth of 10.5% in office leasing, surpassing other sectors. According to Adam Gorman, owner of Nova North Commercial, the number of office leases increased, with many businesses opting for smaller square footage. Around 76% of office spaces leased in 2023 were less than 2,000 square feet. Retail leasing in Rockland also experienced growth of 5.6% during the same period, primarily leasing spaces of 2,000 square feet or less. However, there was a decline of 45-50% in retail property sales in 2023. Gorman speculated that unless prices decrease, sales of retail properties are likely to remain stagnant, while industrial and multifamily properties maintain their value.
Outdated Office Buildings Face Market Challenges
Although demand for corporate offices has remained low due to remote and hybrid work arrangements since the pandemic, quality office buildings continue to attract interest. However, outdated office buildings are now facing financial distress, with some even going into receivership. Rockland may also witness a similar trend, as Gorman predicts that outdated office buildings will eventually drop out of the market.
Recreational Developments Thrive in Putnam and Dutchess
Putnam and Dutchess counties have experienced rapid growth in recreational developments. Among the recently approved projects is an indoor pickleball and golf complex in Poughkeepsie. Additionally, there is an increasing demand for medical and storage spaces in these areas.
Image: Panel Discussion
Multifamily Housing Sales Plummet in Westchester
Despite the booming construction of new apartment buildings in Westchester, particularly in cities like White Plains, New Rochelle, and Yonkers, sales of multifamily properties plummeted by 68% in 2023 compared to the previous year. This decline is expected to improve in the future, with experts like Amit Doshi, senior executive managing director at Meridian Capital Group, suggesting that market conditions could rebound with changes in the political climate or the implementation of new legislation. Doshi hopes that governments will provide incentives to convert outdated office buildings into multifamily housing developments, which could be a potential bright spot in the market.
In conclusion, the Lower Hudson Valley real estate market in 2023 witnessed varying trends across different counties. While industrial properties experienced high demand, offices faced vacancies in Westchester but saw growth in Rockland. Outdated office buildings encountered challenges, while recreational developments thrived in Putnam and Dutchess. Multifamily housing sales decreased, but experts remain optimistic about potential improvements in the market.
