To paraphrase Bob Dylan, you don’t need a weatherman to see which way the wind is blowing when it comes to the region’s office, warehouse/industrial, and retail vacancy landscape.
In a word, it is a case of commercial real estate Deja Vu.
The vacancy rate in the office market has risen for the third year in a row. Industrial/warehouse space is in short supply.
Retail, exclusive of malls, is kind of holding its own. Kind of.
A trio of CBRE specialists: Lida Eberz, Mike Clark, and Sarah Cashmere-Warren offered their insight:
When it comes to industrial/warehouse space, Eberz offers a long-standing overview:
Space is at a premium. Of the 69 million square feet of warehouse/industrial space, there is just a 1.9 percent vacancy rate.
“We still remain below the US average of 6.0 Buffalo and Cleveland, from last year to this year, have come down in their vacancy rates, and the other markets have gone up just slightly,” Eberz said.
Considering the national warehouse vacancy rate is 6 percent, one can see how tight the Buffalo market is.
Retail offers another picture, Mike Clark says.
The region has a 10.8 percent vacancy rate but if places like the Boulevard Mall and Eastern Hills Mall are dropped from the data then the regional retail vacancy rate drops to 8 percent - more in line with the national average, Clark says.
There is 23.4 million tracked retail space locally.
“Activity was strong, and we anticipate that to continue for the near future as the second-tier, tertiary markets like Buffalo, are currently highly sought-after markets for national retailers. The demand for locations in these quality centers in all shapes and sizes is strong and the supply is very low,” Clark said.
The office market is tough to gauge, Cashmere-Warren says.
The office vacancy rate is 16.5 percent on 32.8 million square feet, last year it was 15.8 percent.
“I do want to say, for a tertiary, smaller market, B-space plays a very important role. We must keep quality B-space relevant. Not every tenant is going to want to pay $25 to $30 for space,” Cashmere-Warren said.
Early indicators there may be some shifts in the retail and office markets while warehouse options remain tight.
