|
Getting your Trinity Audio player ready...
|
By: Benyamin Davidsons
FedEx has purchased a colossal property in Brooklyn’s Sunset Park. As reported by Crain’s NY, the shipping giant shelled out close to $250 million for the real estate. The 18-acre property, at 75 20th St., is situated at the mouth of the Gowanus Canal. Fedex agreed to pay $248 million to previous owner, which is Bridge Industrial, an industrial real estate firm with offices across the country and in London. Bridge Industrial had bought the property in 2019 for roughly $214 million in partnership with developer Dov Hertz.
Per Crain’s, FedEx plans to open a 246,000-square-foot distribution center at the Sunset Park property. The center should be opened later this year, said Fedex spokesman David Westrick. Roughly 175 employees will work there to start, replacing a smaller building Fedex currently houses in the same industrial park, the spokesman said.
Representatives for Bridge Industrial and Hertz did not immediately respond to Crain’s requests for comment.
Former owners, Bridge Industrial and Hertz’s company, DH Property Holdings, had purchased the property from 601W Cos. Per Crain’s, the partners had plans to build an industrial property spanning more than 1 million square feet at the site, known as Sunset Industrial Park. It is not clear if the firms finished the work on this project. Bridge Industrial’s website lists the project’s completion date as “TBD,” so most probably they did not finish the revamp yet. Hertz also purchased another industrial site about a year earlier, at 640 Columbia St. in Red Hook from 601W Cos. for $47.5 million, in partnership with Goldman Sachs Asset Management.
While office and retail space has been lagging in New York over the past few years, industrial real estate has fared a lot better, with consistently strong demand. So much so, that the average asking rent for industrial properties in the outer boroughs hit a record high of $28.20 per square foot during the fourth quarter of 2023. Also, leasing activity was up 17.6 percent quarter over quarter for industrial space, as per data from Cushman & Wakefield.
In the meantime, the office market, which took a big hit during the COVID-19 pandemic, remains “muted,” per a new report released this month. The grim report says that Manhattan office landlords won’t see a return to 2021’s occupancy levels for another three years, remaining far behind 2019 occupancy, according to Evercore ISI analyst Steve Sakwa. The analysis also lamented over the higher interest rates and the difficulties of refinancing existing loans that are set to expire. Per Crain’s, he expects most office landlords to continue to see falling cash flows through the end of this year. “We need to see better leasing activity and have more confidence in the Fed’s intent to cut rates throughout ‘24 & ‘25 in order to believe the rally is sustainable,” he wrote, noting the small uptick in the last quarter of 2023.
Retail real estate sales and leasing in the city were nothing to brag about either. A new report from real estate research firm CoStar said that the vast majority of retail leases inked in NYC in 2023 were for storefronts smaller than 5,000 square feet. The retail vacancy rate was unchanged year-to-date, at 4.1%. Costar cautioned that the vacancy rate may actually rise in 2024, with many big national chains including Rite Aid, Bed Bath & Beyond and Target, having already announced plans to cut their retail footprints in the Big Apple.
