Upstate New York Market Update: September 2025
By Ryan McGuire – Analyst
The Upstate New York commercial real estate market continues to navigate shifting economic forces in late 2025. On one hand, apartment construction remains strong, supported by renewed population growth and developer confidence in the rental market. On the other hand, property valuations and cross-border economic activity tell a more cautious story. Together, these dynamics highlight the region’s resilience while underscoring the challenges that investors and businesses must watch closely in the months ahead.
Apartment Construction Continues Despite Stagnant Values
Across upstate New York, dozens of apartment developments are set to add several thousand units in the coming years. Firms such as The Michaels Organization in Syracuse are starting ground-up new builds while developers like R.E. McNamara in Buffalo are investing in adaptive reuse. Both of these properties will add hundreds of units to their neighborhoods, reflecting a continued confidence in the upstate NY rental market. This optimism is not without support – New York State grew in population for the first time since COVID-19, bucking a trend of population loss. The upstate region also benefits from affordability; compared to downstate NY and Boston, upstate offers a lower cost of living. Whether or not the upward population trend will continue remains to be seen.
While optimism drives new development across the upstate region, multifamily property values tell a different story. According to Real Capital Analytics, per-unit values across the state have remained largely flat since 2016, with recent years showing a decline from pandemic-era highs. The statewide average stood near $349,000 per unit a decade ago and climbed modestly to about $353,000 by 2019. Valuations peaked in 2022 at more than $400,000 per unit, but recent transactions have since fallen to roughly $260,000. This reset poses challenges for new construction and multifamily investors, who often rely on appreciation to drive returns at exit. Still, the downturn closely mirrors the Federal Reserve’s rate-hiking cycle that began in 2022, suggesting that future rate cuts could provide some relief and support renewed value growth.
Decline in Canadian Visitors Poses Headwinds for Upstate NY Businesses
Since the start of the year, worrying travel trends at the U.S. – Canadian border have emerged as a result of a strained relationship between the two nations. According to the U.S. Bureau of Transportation, Canadian border crossings into Buffalo and Niagara Falls fell by more than 25% in May compared to last year. Several factors are weighing on travel demand, including new tariffs on Canadian goods, negative political rhetoric from the U.S., and a weak Canadian dollar.
This decline is already evident in the local hospitality and retail sectors. According to WGRZ news, hotel occupancy in Western New York dropped 2.4% in the first half of 2025. The Fashion Outlets in Niagara Falls tell Buffalo Business First that foot traffic is also down 30% compared to 2024. Although some retailers note that Canadian shoppers are slowly beginning to return, restoring cross-border activity remains an uphill challenge. Prolonged weakness in Canadian visitation could suppress demand across multiple real estate sectors — from hotels and retail centers to entertainment venues and the warehouses that supply them — underscoring the region’s reliance on its northern neighbor.
