Syracuse, NY Office Market Q2 2019 Summary
Core Content Overview
This document provides an analysis of the Syracuse, NY office market for the second quarter of 2019, including economic indicators, market performance, and key transactions. It highlights trends in leasing activity, vacancy rates, rental prices, and construction, as well as the influence of major economic drivers in the region.
Main Economic Indicators
| Indicator |
Q2 2018 |
Q2 2019 |
12-Month Forecast |
| Syracuse Employment |
319.3k |
323.8k |
▲ |
| Syracuse Unemployment Rate |
4.4% |
4.0% |
■ |
| U.S. Unemployment |
3.9% |
3.6% |
▼ |
- Syracuse Employment increased slightly from Q2 2018 to Q2 2019, indicating a stable economic environment.
- Unemployment Rate in Syracuse decreased, showing improved job market conditions.
- The U.S. Unemployment Rate also declined, reflecting a broader economic trend.
Market Performance (Overall, All Classes)
| Metric |
Q2 2018 |
Q2 2019 |
12-Month Forecast |
| Vacancy |
12.4% |
13.1% |
▼ |
| Net Absorption (sf) |
168k |
-168k |
▲ |
| Under Construction (sf) |
0 |
50,528 |
▲ |
| Average Asking Rent (psf/year) |
$16.59 |
$17.27 |
▲ |
- Vacancy rate rose slightly from 12.4% to 13.1%, but is expected to decline in the coming months.
- Net absorption was negative in Q2 2019, suggesting more space was vacated than leased.
- Under construction space increased, indicating new office developments.
- Average asking rent increased from $16.59 to $17.27, showing a slight upward trend in rental prices.
Market Overview by Submarket
| Submarket |
Inventory (SF) |
Sublet Vacant (SF) |
Direct Vacant (SF) |
Vacancy Rate |
Net Absorption (SF) |
YTD Net Absorption (SF) |
YTD Leasing Activity (SF) |
Under Construction (SF) |
Avg Asking Rent (All Classes) |
Avg Asking Rent (Class A) |
| CBD |
5,595,734 |
55,893 |
949,379 |
18.0% |
-16,959 |
-44,539 |
96,990 |
0 |
$17.87 |
$19.35 |
| East |
4,681,617 |
15,920 |
518,680 |
11.4% |
-142,788 |
-191,823 |
34,054 |
0 |
$14.75 |
$15.22 |
| North |
3,791,725 |
7,335 |
389,692 |
10.5% |
-8,309 |
4,417 |
70,809 |
25,000 |
$16.08 |
$18.41 |
| South |
303,363 |
5,500 |
1,700 |
2.4% |
0 |
0 |
0 |
0 |
$0.00 |
$0.00 |
| West |
1,738,494 |
0 |
161,184 |
9.3% |
355 |
-22,407 |
3,500 |
25,528 |
$19.87 |
$21.24 |
| Total |
16,110,933 |
84,648 |
2,020,635 |
13.1% |
-167,701 |
-254,352 |
205,353 |
50,528 |
$17.27 |
$19.11 |
- The CBD had the highest vacancy rate at 18.0%, but Class A properties in the CBD showed a higher average asking rent.
- The North submarket had a lower vacancy rate and showed some positive net absorption in the year-to-date.
- The South submarket had minimal vacancy and no net absorption, indicating a stable market.
- The West submarket had a higher average asking rent, suggesting stronger demand for space.
- The total market vacancy rate was 13.1%, with a negative net absorption in Q2 2019.
Key Lease Transactions Q2 2019
| Property |
SF |
Tenant |
Transaction Type |
Submarket |
| 300 South State Street |
30,734 |
Hayler Fryer & Coon |
New Lease |
CBD |
| 290 Elwood Davis Road |
25,000 |
Advocates Inc |
New Lease |
North |
| 100 Madison Street |
12,064 |
AXA Group |
New Lease |
CBD |
| 250 South Clinton Street |
12,801 |
Olinsky Law Group |
New Lease |
CBD |
| 235 Walton Street |
6,400 |
ABC Creative Group |
New Lease |
CBD |
| 225 Greenfield Parkway |
6,059 |
Paragon Home Loans |
New Lease |
North |
| 231 Salina Meadows Parkway |
4,367 |
Bankers Life Insurance |
New Lease |
North |
- Several new leases were signed with major tenants, including law firms and insurance companies.
- These transactions were concentrated in the CBD and North submarkets, which are seen as more desirable for business operations.
Key Sales Transactions Q2 2019
| Property |
SF |
Seller |
Sale Price |
Price per SF |
Submarket |
| 290 Elwood Davis Road |
115,700 |
290 Elwood Davis Road LLC |
$3,400,000 / $42 |
North |
|
| 1000 Genesee Street East |
84,000 |
Syracuse Medical Properties LLC |
$18,900,000 / $225 |
East |
|
| 225 Greenfield Parkway |
75,204 |
The Edgewater Salina Co |
$5,800,000 / $77 |
North |
|
| 333 South Salina Street |
67,212 |
Acropolis Development LLC |
$2,900,000 / $41 |
CBD |
|
| 2804 Court Street |
6,160 |
Light Spec |
$315,000 / $75 |
East |
|
- Multiple office properties were sold, with prices varying by submarket.
- The CBD and North submarkets saw significant sales activity, indicating strong interest in these areas.
Outlook for the Syracuse Office Market
- The Syracuse office market is expected to remain strong for the remainder of 2019.
- There is a continued shortage of high-quality, large-block office space in suburban areas, driving demand towards the Downtown.
- Relocation of headquarters to Downtown is anticipated, especially as the future of Interstate 81 is still uncertain.
- Redevelopment projects are ongoing and expected to contribute to market growth.
Conclusion
The Syracuse office market in Q2 2019 showed a mix of stability and growth, driven by the presence of universities, hospitals, and engineering/aerospace industries. While vacancy rates rose slightly, the overall market remains attractive, with increasing asking rents and active leasing and sales activity. The potential impact of infrastructure changes, such as the fate of Interstate 81, could influence future demand patterns.
