The Long Island Commercial Real Estate market, one of the largest and most important in the country, is comprised of 65 Million Square feet of office space and almost 163 million square feet of industrial and flex space. Including some significant positive gains, Long Island’s economy has begun to decrease its unemployment rate alongside the big picture of the Nation’s. The biggest news of the quarter was that 2 large companies decided to relocate all of their jobs from Long Island. The new owner of drug maker Forest Laboratories plans to move most of its Long Island operations to New Jersey, leading to the loss of hundreds of jobs, and the sale of several of their buildings. Also, the new owner of Medical Action Industries decided to relocate its 51 employees to their North Carolina Headquarters.
The industrial real estate market is still the most active area of the Long Island real estate market with significant sales and leasing activity causing availability rates to continue below 10%. Many of the larger industrial spaces are now rented, and since few new industrial construction projects are planned, inventory should remain low through the next several years.
In August the number of private sector jobs on Long Island increased to 1,120,800 in. This spring’s gains extend across the job sectors of: transportation, education and health services, professional and business services, natural resources, mining and construction, and other service sectors. Many more people are employed by these new service jobs, however their incomes are not substantial enough to bolster the economy.
High living expenses, taxes, and the absence of new substantial jobs on Long Island are causing the exodus of young adults from Long Island. A survey of Long Island residents aged 18 to 36 shows 30 percent of them plan to leave Long Island. Young adults, no longer planning to start families or companies on Long Island, may have devastating effects on the future of Long Island’s economy. Along with the exodus of young adults, companies are also leaving Long Island due to the strict regulations placed on companies as well as the high costs of staying on Long Island.
Of the roughly 65 million square feet of office space comprised of 905 office buildings, approximately 14.51% is available which is a slight decrease from the previous quarter. Asking rental rates have decreased slightly as well to $24.81 average over all office classes in the last quarter. The vacancy rate for the 163 million square feet of industrial space has decreased to 9.4%. Rental rates currently average approximately $9.14/per square foot net which was $.20 higher than the previous quarter
We continue to recommend that now is a good time to arrange long term leases or renegotiate existing leases. The market is still in favor of the tenant and a credit tenant still has significant negotiating power.
Significant tax incentive programs are still being offered by New York State and County economic development authorities induce companies to grow on Long Island.
|Property Class||Class A Office||B 40,000+||B 40,000-||C||Average|
|Major Transactions for Third Quarter 2014|
|Calvert Family Holdings||129,635sf||Industrial||Sale||$11.5M|
|Group USA’s Camill La Vie||11,000sf||Retail||Lease||N/A|
|Carr Business Systems||15,000sf||Office||Sublease||N/A|
|Fairfield buys Adecco HQ||180,000sf||Office||Sale||$13.25M|