JLL reports strong fundamentals evident in new class A developments on Long Island

Despite continued strong economic fundamentals, JLL noted the Long Island office market started the year slowly. The market remains bifurcated, with Nassau County enjoying declining vacancy rates and Suffolk County reporting rising vacancy rates due to negative absorption. Nassau County recorded 174,831 s/f of positive absorption in the first quarter of 2014. Much of the positive absorption came from ProHealth Care Associates taking 132,000 s/f at One Dakota Dr. in Lake Success. The building was previously the headquarters of Canon USA, which relocated to Melville in 2013. Suffolk County recorded 40,269 s/f of negative absorption in the first quarter of 2014. The county continued to see a steady rise in vacancy rates, fueled primarily by Allstate Insurance Co.'s consolidation. The insurer is consolidating its regional headquarters operations into an 80,000 s/f, class A office building under construction at 898 Veterans Memorial Highway in Hauppauge. In total, approximately 219,840 s/f of office space is being developed throughout Nassau County as well as The Hampton Business District at Gabreski Airport, which broke ground in March 2014. The 50-acre, mixed-use park could comprise nine buildings totaling 440,000 s/f and include a 145-room hotel and up to 100,000 s/f of office space. "Class A office buildings comprise more than 80.0% of new development under construction in Nassau and Suffolk counties in the first quarter of 2014," said Raymond Ruiz, executive vice president and head of the firm's Long Island office. "Current conditions will create opportunities for tenants seeking space in Long Island." Long Island continues to see notable leasing, although most of the tenant activity was centered around Nassau County, which claimed nearly 70% of all deals signed so far this year. Approximately 240,000 s/f of office leasing transactions took place in Long Island during the first quarter of 2014, compared with 900,000 s/f in the first quarter of 2013. Sublease activity has increased nearly 65% year-over-year. Highlights of the first quarter of 2014 include: * Although Long Island's office market continued to post healthy market fundamentals in the first quarter of the year, the slowdown in deal volume pushed up overall vacancy rates. Long Island's overall vacancy rate rose slightly to 16.5% in the first quarter of 2014, an increase of 1.9% (or 0.3%age points) from 16.2% one year earlier. The island's class A vacancy rate fell to 16.2% this quarter, a decrease of 2.4% (or 0.4%age points) from 16.6% 12 months ago. * Overall rents in Long Island fell to $25.63 per s/f in the first quarter of 2014, a decrease of 2.4% from $26.25 per s/f one year earlier. The county's class A rents dropped to $29.08 per s/f, a decrease of nearly 1.0% from $29.35 per s/f 12 months ago. * Nassau County's overall vacancy rate fell to 15.6% in the first quarter of 2014, a decrease of 2.5% (or 0.4%age points) from 16% one year earlier. The county's Class A vacancy rate dropped to 15.4% this quarter, a decrease of 11% (or 1.9% age points) from 17.3% 12 months ago. * Suffolk County's overall vacancy rate rose to 18.0% in the first quarter of 2014, an increase of 9.1% (or 1.5%age points) from 16.5% one year earlier. The county's class A vacancy rate grew to 17.8% this quarter, an increase of 17.1% (or 2.6% age points) from 15.2% 12 months ago. Suffolk County vacancy rates are expected to remain at elevated levels for much of the coming year. The Nassau County Industrial Development Agency and the Suffolk County Industrial Development Agency continue to provide business enticements, including tax incentives, to boost Long Island's economy. For more news, videos and research resources from Jones Lang LaSalle, please visit the firm's U.S. media center webpage. Bookmark it here: http://bit.ly/18P2tkv. JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2012, the New York tri-state team completed approximately 23.8 million s/f in lease transactions, arranged capital markets transactions valued at $1.57 billion, managed projects valued at nearly $7.0 billion, and oversaw a property and facilities management portfolio of 102.1 million s/f and an agency leasing portfolio of 76.0 million s/f. JLL is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $4 billion, JLL operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion s/f and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $47.6 billion of real estate assets under management.