When working with Canadian companies considering a Buffalo Niagara business expansion, availability, costs, and market conditions are always primary concerns. Canadian business owners are unsure of the availability of commercial properties, average sale/lease rates, and the current trends relating to Buffalo Niagara real estate.
Some of our most frequently asked questions:
- How does Buffalo Niagara compare to the U.S. real estate market?
- How are real estate prices and landlord incentives trending locally?
- Is there a shortage of properties which tenants and buyers are competing for?
To help address these concerns we refer to our partner CBRE|Buffalo, and its annual MarketView report. This helpful publication summarizes the real estate market in Buffalo Niagara. Listed are some excerpts from the Annual EOY 2017 report that Canadian businesses owners find particularly useful:
Industrial Market
In 2017 the metropolitan Buffalo marketplace established a record low overall industrial availability rate of 3.5%, eclipsing the previous mark of 3.6% in 2015. Year-over-year there was a 1.1% decrease from 2016, when the rate was 4.6%. This reduction in availability rate resulted in a net absorption of 1,053,087 sq. ft. (It should be noted that almost 50% of the total absorption was due to a single transaction in which a 510,000 sq. ft. distribution warehouse was absorbed).
Nationwide availability rates continued to decrease year-over-year with the national availability rate falling 50 basis points (bps) to 7.7% in Q3 2017 (CBRE Research, Q3 2017). The national market has now experienced 23 consecutive quarters of availability rate decline and the rate is at its lowest since Q3 2001.
For the greater Buffalo market, 2017 marks the 13th consecutive year that the industrial market availability rate has remained below the national average.
As a border city, the status of the Canadian industrial marketplace and economy is significant to our region. The Canadian industrial markets experienced an all-time low for availability in 2017 with the Toronto area standing at 2.3% availability rate, London, Ontario at 7.4% and Montreal at 6.2%.
Quick Stats |
Current Year |
Change from last year |
Vacancy |
3.5% |
Down |
Net Absorption |
1,053,087 SF |
Up |
Construction |
325,000 SF |
Up |
Sales Average |
$32.85 per Sq Ft |
Up |
The right column fields are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period).
Office Market
After back-to-back years of decreases, the Q4 2017 Buffalo Office Market vacancy rate increased to 13.1%. The 0.6% increase from the previous year, however, did not diminish the overall activity and construction occurring across the office sector. Even though vacancy rose, there was positive net absorption of 208,430 sq. ft. and over 400,000 sq. ft. of office completions throughout the area. These completions contributed to the overall increase in vacancy. Construction is up from last year, with over 425,000 sq. ft. projected or planned.
Buffalo continues to follow the National office sector trend, which predicted a slow-down due to new supply coming online and political and economic uncertainty. The U.S. vacancy rate has stayed within 12.9% and 13.1% over the course of eight quarters, decreasing to 12.9% as of Q3, 2017. (CBRE Research, Q3 2017)
Downtown leasing activity remains strong with attention focused on Class A product. Pressure for quality space downtown has been seen with the shortage of new projects coming online
Strong tenant activity occurred in the life sciences/ healthcare, and financial services industries across the Buffalo market. Tenants looking for large blocks of quality space were limited especially downtown, while the desire for a “live, work, play” environment continued. Despite large amounts of older inventory on the market tenants are focused on employee attraction and retention, driving them towards quality, amenity filled space. This trend has forced some Class B landlords to invest in building improvements, or explore mixed use concepts for their properties.
Quick Stats |
Current Year |
Change from last year |
Vacancy |
13.1% |
Up |
Class A Lease Rates |
$19-26 |
Same |
Class B Lease Rates |
$15-20 |
Same |
The right column fields are trend indicators over the specified time period and do not represent a positive or negative value. (e.g., absorption could be negative, but still represent a positive trend over a specified period).
Additional thoughts:
In the industrial sector there exists greater demand for purchasing versus leasing. Due to the sizable price increases in construction materials during the past 12 months, particularly steel and lumber, we expect the upward price pressure to continue for both sale and lease costs, particularly in the industrial sector.
While leasing remains the first choice in the office sector, there exists a great demand for downtown alternatives versus suburban locales which are showing signs of slowing.
Steve Blake, CCIM with CBRE|Buffalo with over 35 years of brokerage experience in both Canada (Toronto) and the US.
For additional information contact Steve at (716) 855-3700 x8707 or steve.blake@cbre-buffalo.com
Source: CBRE Research, Q3 2017/CBRE Limited ** Source: CBRE Buffalo New York, LLC Q4 2017