The Impact of Nearshoring on NYC Commercial Real Estate

The global phenomenon of nearshoring—a corporate movement of bringing supply chain functions closer to home—is reshaping the commercial real estate market in New York City. As firms seek to mitigate risk, reduce transportation costs, and ensure supply chain reliability, nearshoring is driving demand for industrial, office, and logistics space in cities. Real estate developer Dov Hertz says the phenomenon is bringing tremendous opportunity to NYC’s commercial real estate market.

What is Nearshoring?

Nearshoring entails the movement of manufacturing and supply chain operations from distant locations—such as Asia—to countries in close proximity to the company’s core market. For American firms, this often means bringing operations to nearby countries such as Mexico or to local urban hubs such as New York City.

“Nearshoring is a reaction to global disruption,” Dov Hertz describes. “Companies are trying to minimize reliance on global supply chains, and NYC is ideally situated to take advantage of the trend.”

The COVID-19 pandemic and geopolitical uncertainty revealed weaknesses in global supply chains, and firms began reconsidering their logistics plans. Nearshoring enables firms to be more agile, have faster response times, and have greater control over their operations.

Increased Demand for Industrial Space

The most visible impact of nearshoring in NYC is the increased demand for industrial and logistics space. Businesses relocating or expanding supply chain activities require warehouses, distribution facilities, and factories close to their end users.

“Industrial space is experiencing a renaissance in NYC,” Hertz notes. “Land is not readily available, but developers are getting creative to build spaces that can meet the requirements of today’s supply chains, like multi-story warehouses.”

These facilities are established to handle last-mile delivery, a crucial component of nearshored supply chains. Proximity to NYC’s dense consumer market allows companies to reduce delivery time and expenses, thereby increasing their competitiveness in the market.

Implications for Office Space

Nearshoring will impact NYC’s office market as well. Companies nearshoring their operations will require additional office space to house supply chain management, R&D, and administrative personnel. Demand is particularly strong with tech companies, which are leaders in adopting nearshored operations and advanced logistics technologies.

“Nearshoring is not just for physical goods,” Hertz states. “It’s also about knowledge work and innovation. NYC’s office market will gain as businesses expand their presence in the city.”

The trend may revitalize parts of NYC’s office market, such as Class A space with amenity-filled workplaces to vie for talent.

Sustainability and Community Impact

Nearshoring also has the advantage of supporting sustainability efforts since it reduces the carbon emissions of long-distance transportation. By locating operations closer to NYC, businesses can reduce transport emissions and assist in driving the city’s overall environmental agenda.

“Nearshoring can stimulate the economy, but it also has the capacity to provide community-based and sustainable solutions,” concludes Hertz. “Developers and companies have to make an effort to put good environmental and good community schemes at the top of their priority list.”

The Road Ahead

As nearshoring transforms supply chains, NYC is poised to become a center for this accelerating phenomenon. The city’s proximity, talent pool, and established infrastructure will make it a viable location for companies looking to redirect their operations.

From office buildings to factory complexes, the impact of nearshoring on NYC’s commercial real estate market runs deep and wide. Developers like Dov Hertz are spearheading the movement, constructing cutting-edge structures that cater to the demands of a more localized, efficient, and sustainable economy.

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Leading Merchant Builder Dov Hertz Identifies Market Trends