Terreno Realty’s Queens Acquisition Signals Growing Confidence in NYC Industrial Market

Terreno Realty Corporation’s $7.6 million purchase of a 20,000-square-foot industrial distribution building in Queens, New York, marks a strategic move to capitalize on the city’s evolving industrial real estate landscape. The property, located at 43-27 33rd Street in Long Island City, sits adjacent to New York State Route 25 and near the Queensboro Bridge, offering prime access to major transportation routes. Fully leased through December 2027 to a commercial bakery and kitchen, the acquisition aligns with Terreno’s focus on income-producing industrial assets in high-demand coastal markets.

A Strategic Bet on Queens’ Industrial Growth
The acquisition underscores the growing appeal of industrial properties in Queens, where the commercial real estate market has shown resilience amid broader sector declines. While total investment sales in Queens fell 7% year-over-year in 2024 to $2.95 billion, the industrial and mixed-use sectors defied the trend. Notably, Terreno’s move follows its $246 million acquisition of an industrial portfolio near JFK Airport in 2024, highlighting investor confidence in the area’s logistics potential.

The Queens property’s stabilized cap rate of 4.6% reflects its strong fundamentals: a full lease to a creditworthy tenant, prime location, and demand for distribution facilities near transit hubs. The cap rate calculation—based on market occupancy assumptions and projected net operating income—suggests the property is priced competitively within the industrial sector, where yields remain lower compared to other asset classes but offer stability.

Queens Market Dynamics: A Tale of Two Sectors
Queens’ commercial real estate market in late 2024 was bifurcated. While multifamily sales surged—driven by the Good Cause Eviction Law, which stabilized tenant-landlord relations—office and hotel sectors lagged. Development sales plummeted 32% year-over-year, reaching their lowest level since 2012. However, industrial and mixed-use assets thrived. Multifamily transactions alone rose 10% to 249 deals, while development activity in buildable square footage increased, signaling optimism about future projects.

The JFK Airport redevelopment, a $19 billion public-private initiative, is a key catalyst. Expected to create 149,000 jobs, it positions the area as a logistics hub, attracting investors like Terreno. The airport’s proximity to the Queens property and other industrial sites ensures demand for distribution centers, warehouses, and light manufacturing spaces.

Policy and Infrastructure: Fueling Future Growth
Regulatory changes, such as New York’s City of Yes zoning reforms and the 485-x tax exemption program, are expected to further boost development. These policies incentivize adaptive reuse and mixed-use projects, reducing barriers to entry for investors. Meanwhile, stable mortgage rates—hovering near 6%—have reduced financing uncertainty, encouraging both institutional and individual buyers.

Risks and Considerations
Despite the optimism, challenges remain. Queens’ residential inventory grew 18% year-over-year to 6,414 active listings, slightly favoring buyers. Commercial sectors like office and hotel real estate continue to struggle without large institutional deals. Additionally, the Queens property’s single-tenant structure, while providing predictable income, introduces concentration risk. However, the 100% lease through 2027 mitigates near-term vacancy concerns.

Conclusion: A Pivotal Moment for Industrial Queens
Terreno’s acquisition is emblematic of a broader shift toward industrial real estate in Queens. With transaction volumes up 57% year-over-year in key sectors and JFK’s redevelopment on the horizon, the market is poised for sustained growth. The $7.6 million purchase reflects investor confidence in the area’s logistics advantages and regulatory tailwinds, even as broader commercial sectors face headwinds.

Analysts project a market rebound in 2025, fueled by stabilized interest rates, policy clarity, and infrastructure investments. For industrial investors like Terreno, Queens represents a rare combination of accessibility, demand stability, and long-term growth potential—a recipe for success in an evolving urban landscape.

As the Queens industrial market continues to mature, stakeholders should watch for developments tied to JFK’s transformation and the rollout of zoning reforms. With its strategic location and lease terms, Terreno’s latest acquisition is not just a tactical move—it’s a bet on Queens’ future as a critical node in the U.S. logistics network.