CBRE Upstate outlines Syracuse real-estate market trends

SYRACUSE —The Syracuse metropolitan commercial real-estate market experienced increased demand for office space and multifamily housing in 2024, according to findings presented at CBRE Upstate NY’s Syracuse Market Outlook Midyear Review. The event was held June 5 at SKY Armory in Syracuse. The keynote speaker was Travis Deese, CBRE’s director of multifamily research, who provided national context to Syracuse’s high-demand residential real-estate market by pointing out that the Northeast and Midwest lagged behind the rest of the nation in building new multifamily inventory to meet demand. Deese was joined by local representatives from CBRE Upstate NY’s Syracuse office, who highlighted trends in the commercial real-estate market, including the office and industrial sectors. The highlights of the presentation included the following: • Office-vacancy rates in the Syracuse metro area are down slightly from 2023 and are below the national average. According to the firm’s most recent market report, “The Syracuse metro office market finished 2024 with a vacancy rate of 12.0 percent, as compared to the U.S. national average of 18.9 percent.” • The 2024 office asking lease rate for the Syracuse market was $17.26 per square foot. This was up from last year, and was attributed to conversions of office space into residential and storage, which, “are continuing to decrease supply, which is helping with the overall absorption of space in the market and helping the office sector find a new equilibrium.” • The “flight to quality” continues to be a trend in the Syracuse office market. This refers to Class A properties overperforming Class B and C properties in the market at a widening rate. • The Syracuse metro area’s industrial and logistics real-estate market’s vacancy rate jumped from below 5 percent at the beginning of 2024 to 6.9 percent at year’s end, largely because of the closure of a Rite Aid distribution center in Onondaga County. • Despite the market’s increased industrial vacancy, asking rates in the sector increased 8.4 percent year-over-year to $6.89 per square foot. • “Significant progress” is projected in Syracuse’s industrial market in 2025, driven by Micron’s expected breaking ground on the first phase of their plant and TTM Technologies’ $130 million facility in the town of DeWitt, according to the real-estate firm. CBRE forecasts that the national office market will benefit in 2025 from falling interest rates, increased optimism over the economy, and deregulation, but will see challenges in the form of labor shortages and the use of artificial intelligence to replace some office-based jobs. In the national industrial market, CBRE projects that the greatest demand for new space in 2025 third-party logistics providers, as retailers and wholesalers outsource their distribution operations.