JLL: Long Island’s overall vacancy rate remains at lowest level in more than 5 years

Melville, NY Long Island recorded its fourth consecutive quarter of falling overall vacancy rates in the third quarter of 2016, according to JLL. The market’s overall vacancy rate fell to 14.3% in the third quarter of 2016, a decrease of 11.2% (or 180 basis points) from 16.1% one year ago. Long Island’s overall vacancy rate fell every quarter since year-end 2015, when it posted an overall vacancy rate of 16.8%t at year-end 2015. “Flight to quality throughout Long Island has left a limited supply of large class A availabilities in the market, particularly in the Western and Central Nassau submarkets where the relatively low vacancy rates remain in the low teens amid heightened demands,” said Raymond Ruiz, executive vice president and head of the firm’s Long Island office. “The continued run of strong performance throughout Nassau County was largely due to consistent demand in recent months as businesses continued to shift east in search of larger blocks of space.” Approximately 280,000 s/f of office space was leased throughout Long Island during the third quarter of 2016, nearly matching the 300,000 s/f during the previous quarter. The market recorded approximately 1.3 million s/f of leasing activity year-to-date, putting Long Island on track for the lowest level of deal volume since 2012. Although leasing volume remained slow in the third quarter of 2016 compared with recent years, Long Island posted a total of 33,000 s/f of positive net absorption, following nearly 510,000 s/f of positive net absorption just three months prior. Approximately 60% of the total absorption was focused in the Central Suffolk submarket. Net absorption has remained positive in Long Island since 2014. Companies looking to expand on Long Island have begun to seek availabilities in Suffolk County. LBI Software, for example, plans to relocate from its current office at 7600 Jericho Tpke. in Woodbury to 999 Walt Whitman Rd. in Melville. The software firm will occupy 9,000 s/f and expand as the company grows. Numerous significant transactions closed in Nassau County in the third quarter of 2016. Mount Sinai Health System took 30,000 s/f at 1155 Northern Blvd. in Manhasset, ShelterPoint Life Insurance Co. leased 18,000 s/f at 1225 Franklin Ave. Plaza, and Moritt Hock & Hamroff LLP renewed 31,500 s/f at 400 Garden City Plaza in Garden City. In addition, Merrill Lynch Wealth Management renewed 28,522 s/f at 1305 Walt Whitman Rd. in Melville. Highlights of the third quarter of 2016 include: • Long Island’s class A vacancy rate dropped to 12.9% in the third quarter of 2016, a decrease of 9.8% (or 140 basis points) from 14.3 percent one year ago. Year over year, Nassau County’s Class A vacancy rate declined to 9.8%  this quarter from 12.7%t. Suffolk County’s Class A vacancy rate rose to 18.5 percent this quarter from 17.2 percent one year ago. • Average overall asking rents for class A space on Long Island dropped to $29.80 per s/f in the third quarter of 2016, a year-over-year decrease of 1.2% from $30.15 per s/f. Nassau County class A rents rose to $32.77 per s/f from $31.88 per s/f in the second quarter of 2015. Suffolk County class A rents fell to $27.07 per s/f this quarter from $27.60 per s/f one year ago. • In Suffolk County, a number of transit-focused build-to-suits are currently proposed to attract the younger workforce. The projects include a 112,000 s/f office building proposed at 20 Station Drive as part of the Wyandanch Village revitalization project, and 300,000 s/f of commercial space that is planned for the Ronkonkoma Hub project.