We have surpassed the halfway point of 2017 and the second quarter market reports are officially in. Here is the latest update and report on Long Island’s commercial real estate markets. Arming you with the details and statistics, this report includes Long Island’s retail, office, and industrial markets. To most easily digest this information, we broke it down by market with a focus on three key factors: vacancy rates, rental rates, and cap rates.
First, we will look at Long Island’s retail market. The Nassau and Suffolk retail market’s vacancy rate continued to rise from the close of the first quarter ending the second quarter at 3.6%. As for rental rates, they have increased from the first quarter of this year ending second quarter with rental rates at $33.93 per s/f. This represents a substantial increase of 4% in rental rates from the second quarter, and a 4.72% increase from this time last year. Regarding cap rates, the retail market cap rates have been lower in 2017, averaging 6% compared to the same period in 2016 when they averaged 6.38%.
Next, we have Long Island’s office market. Similar to the retail market, the vacancy rate in the Nassau and Suffolk County office market has also seen an increase from the end of the first quarter to the end of the second quarter of this year with the vacancy rate increasing from 6.7% to 7.2%. As for rental rates, they have decreased from the year’s first quarter ending at $27.61 per s/f at the close of the second quarter 2017. This represents a 3.5% decrease in rental rates from the end of the first quarter where rental rates were reported at $28.60. As for cap rates, the office market cap rates have been higher in 2017, averaging at 6.79% compared to the same period in 2016 when they averaged at 6.19%.
Last, we have Long Island’s industrial market. The Nassau and Suffolk County industrial market ended the second quarter of 2017 with an unchanged vacancy rate from the end of the first quarter, staying at 4.1%. As for rental rates, the second quarter of 2017 closed with an increase in rates at $15.55 per s/f. This represents a 2% increase in quoted rental rates from the end of the previous quarter when the rental rate average was reported at $15.25 per s/f. Lastly, industrial market cap rates have been substantially higher in 2017, averaging 10.07% compared to this time last year when they had averaged 3.55%.
With a singular commitment to your objectives, the AIP team dedicates all energies and resources to helping business owners and investors successfully navigate the unique challenges and opportunities of the Long Island commercial real estate market. AIP’s tireless efforts on your behalf ensure the best possible return on your investment and the smoothest path to your goals. At AIP, we don’t just ensure commercial real estate profits; we optimize commercial real estate profits.
Ron Koenigsberg is the president of American Investment Properties, Garden City, N.Y.