Across the New York metropolitan region, higher interest rates are making it harder for traditional commercial real estate investors to justify acquisitions, slowing investment sales and changing who is driving transactions. Jason Horowitz, Broker of Record at Triforce Commercial Real Estate, says many properties that once attracted investor demand no longer produce viable returns at today’s borrowing costs. Owner-users, meaning business owners purchasing space for their own operations, have become the most active buyers. At the same time, businesses are increasingly relocating from New York City to suburban markets in New Jersey and the Hudson Valley, where occupancy costs are significantly lower. Landlords are adapting by offering concessions, stepped rents, and more flexible lease structures to secure tenants. Together, these shifts are reshaping how and where commercial real estate deals are happening across the region.
Rising borrowing costs have fundamentally altered the economics of commercial real estate investment across the New York region. Transactions that made financial sense a few years ago often no longer pencil out at today’s rates.
Horowitz has seen this firsthand. He recently revisited a property he had previously evaluated for purchase several years earlier. While the building itself had not changed significantly, the financing environment had. Higher interest rates meant the same rental income could no longer support the price he would have been willing to pay before. “I was underwriting a building personally that I underwrote like three, four years ago,” he says. “Now I’m not able to come anywhere near where I was prior.”
This shift has slowed traditional investment activity, as buyers who depend on predictable rental returns struggle to make deals financially viable. Rather than stretching to meet sellers’ expectations, many investors are choosing to wait for more favorable conditions.
As investment activity has slowed, owner-users have stepped in to fill the gap. These buyers evaluate properties differently, focusing on the cost of occupying space rather than generating investment returns.
Horowitz says most of his recent sales have involved businesses purchasing properties for their own use. For these buyers, ownership provides long-term stability and protection against rising rents, even if a property would not meet traditional investment return thresholds. This shift reflects a broader change in how commercial properties are being valued. Businesses that plan to occupy their space can justify purchases that investors cannot, allowing deals to move forward even as financing conditions remain challenging.
Many businesses are also reconsidering where they operate. Suburban markets across New Jersey and the Hudson Valley are attracting tenants and buyers seeking to reduce occupancy costs without sacrificing functionality.
The price differences can be substantial. “Deals that I could be making in Manhattan at $120 a foot, I could be making for $25 to $35 per square foot in the suburbs,” Horowitz says. For many businesses, that cost gap creates a compelling financial incentive to relocate or expand outside the city.
Remote work and changing workplace habits have accelerated this trend. Companies that once needed New York City addresses are now more willing to operate from suburban locations, particularly when much of their work can be done remotely. Others are opening satellite offices or relocating entirely to take advantage of lower costs and greater flexibility.
Landlords across the region are adjusting their approach in response to changing market conditions. With tenants facing higher construction costs, financing constraints, and economic uncertainty, rigid lease terms can make transactions difficult to complete.
Many landlords are offering concessions designed to help tenants manage upfront costs. These may include free rent at the beginning of the lease, stepped rent structures that gradually increase over time, or other financial accommodations. “Perhaps there will be several months of concession on the front end,” Horowitz says. “Perhaps there’s a step-up tiered rent program.” These arrangements allow tenants to invest in build-outs and establish their operations before taking on full rental obligations, while giving landlords long-term occupancy and income stability. In many cases, flexibility has become essential to completing deals that might otherwise fall apart.
Commercial real estate activity across the New York metropolitan region has not stopped, but it has become more selective and more dependent on practical business needs. Investment-driven acquisitions have slowed as higher borrowing costs reduce returns, while owner-users have become a more reliable source of demand.
The balance of activity has shifted toward suburban markets, where lower occupancy costs make expansion and ownership more feasible. Landlords are increasingly structuring leases to support tenant success rather than relying on traditional terms. As long as financing costs remain elevated, owner-users and cost-conscious tenants are likely to remain the primary force driving transactions.
Jason Horowitz is the Broker of Record and founder of Triforce Commercial Real Estate, a commercial brokerage operating across New York, New Jersey, Pennsylvania, and Delaware. Founded in 2017, Triforce represents clients in the leasing and sale of retail, office, industrial, and multifamily properties, with a growing focus on specialized asset classes including student housing and cannabis retail. In addition to his brokerage work, Horowitz is active as a property owner and investor, giving him direct experience with the financial and operational challenges shaping today’s commercial real estate market.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
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