Syracuse, NY Office Market Q4 2016 Summary
Core Content
This document provides a detailed overview of the Syracuse, NY office market for the fourth quarter of 2016, highlighting economic indicators, market performance, key lease and sales transactions, and future outlook.
Economic Indicators
| Indicator |
Q4 2015 |
Q4 2016 |
12-Month Forecast |
| Syracuse Employment |
317.9k |
317.4k |
▲ |
| Syracuse Unemployment |
5.2% |
5.1% |
▼ |
| U.S. Unemployment |
5.0% |
4.8% |
▼ |
- The Syracuse economy is in a strong position for 2017, supported by recent funding from the State's Regional Economic Development Council and the Upstate Revitalization Initiative.
- The $62.2 million award will fund 77 projects, focusing on construction jobs and long-term employment.
Market Overview
- Class A Office Market: Active leasing in downtown, with notable transactions such as the relocation of Mackenzie Hughes Law Firm and SUNY Finance and IT departments to The Galleries.
- Suburban Office Market: Facing challenges due to the lack of quality office space, leading to a "game of musical chairs" where tenants struggle to find suitable locations.
- Student Housing Impact: New student housing developments are displacing medical office tenants, leading to the conversion of some office buildings into apartments.
- Aspen Dental Relocation: A potential setback for the downtown market if the move is canceled, which could increase suburban undersupply.
Market Indicators (Overall, All Classes)
| Indicator |
Q4 2015 |
Q4 2016 |
12-Month Forecast |
| Vacancy |
14.4% |
14.9% |
▼ |
| Net Absorption (sf) |
123k |
-101k |
▲ |
| Under Construction (sf) |
259k |
387k |
■ |
| Average Asking Rent* |
$14.73 |
$14.86 |
▲ |
- Rental rates reflect gross asking $psf/year
Submarket Analysis
| Submarket |
Inventory (SF) |
Sublet Vacant (SF) |
Direct Vacant (SF) |
Overall Vacancy Rate |
Current Qtr Net Absorption (SF) |
YTD Net Absorption (SF) |
YTD Leasing Activity (SF) |
Under Construction (SF) |
Overall Average Asking Rent (All Classes)* |
Class A Average Asking Rent* |
| CBD |
5,969,870 |
53,610 |
1,104,503 |
19.4% |
-31,782 |
-714 |
224,319 |
0 |
$14.62 |
$16.53 |
| East |
4,573,190 |
117,587 |
515,674 |
13.6% |
-3,727 |
-127,644 |
142,518 |
0 |
$14.14 |
$15.16 |
| North |
3,681,569 |
3,260 |
434,780 |
11.9% |
-23,126 |
36,678 |
90,365 |
40,000 |
$14.75 |
$17.32 |
| South |
303,363 |
0 |
8,033 |
2.7% |
0 |
-3000 |
800 |
0 |
$15.00 |
N/A |
| West |
1,542,261 |
0 |
151,233 |
9.8% |
-42,495 |
-52,920 |
41,611 |
347,000 |
$17.82 |
$17.64 |
| Syracuse Totals |
16,070,253 |
174,457 |
2,214,223 |
14.9% |
-101,130 |
-147,600 |
498,613 |
387,000 |
$14.86 |
$16.56 |
Key Lease Transactions 2016
| Property |
SF |
Tenant |
Transaction Type |
Submarket |
| 441 S. Salina Street |
60,000 |
SUNY Upstate Medical |
Lease |
SYR-CBD |
| 360 S. Warren Street |
39,360 |
Barclay Damin |
Lease |
SYR-CBD |
| 441 S. Salina Street |
30,000 |
McKenzie Hughes Law Firm |
Lease |
SYR-CBD |
| 6040 Tarbell Road |
16,232 |
Seneca Data |
Lease |
SYR-East |
| 5792 Widewaters Pkwy |
15,000 |
Laser Eye Surgery Center |
Lease |
SYR-East |
| 6757 Kinne Street |
13,760 |
Intersurgical Inc |
Lease |
SYR-East |
Key Sales Transactions 2016
| Property |
SF |
Seller/Buyer |
Price / $PSF |
Submarket |
| 109 Warren Street South |
192,184 |
Kushner Company / Pioneer Companies |
$5,400,000 / $28 |
SYR-CBD |
| 102 West Division Street |
68,707 |
Dave Birchenough / Oak Knitting Mill Commons |
$1,525,000 / $22 |
SYR-West |
| 980 James Street |
45,000 |
WTVH Inc. / Rasselas Associates LLC |
$350,000 / $8 |
SYR-East |
| 7641 Henry Clay Blvd |
20,000 |
Valtech Research LLC / JMA Associates |
$975,000 / $49 |
SYR-North |
| 6399 Molloy Road East |
21,275 |
Molloywood Properties LLC / Airside Technology |
$795,000 / $37 |
SYR-North |
| 723 James Street |
14,800 |
Home Aides of CNY / Vera House |
$625,000 / $42 |
SYR-East |
Outlook
- The Syracuse office real estate market is cautiously optimistic for 2017.
- The lack of quality suburban office options will continue to attract tenants to downtown.
- Despite limited availability of good downtown space, the market is expected to see increased asking rents from larger landlords.
- Speculative development is currently non-existent, but new construction is possible in the future.
About Cushman & Wakefield
- Cushman & Wakefield is a leading global real estate services firm.
- It offers a wide range of services including agency leasing, asset services, capital markets, and investment & asset management.
- The firm has a revenue of $5 billion and operates in over 60 countries with 43,000 employees.
- For more information, contact Brian M. Balash, CCIM at bbalah@pyramidbrokerage.com or +1 315 445 8506.
