An exciting time for R.E. investors on Long Island

L.I. vacancy rates have now come to a new three-year high. As we all can predict, increases in vacancy rates in turn means decreases in rental prices. That was what was seen throughout the market in the fourth quarter of 2008. L.I. has seen its overall office vacancy rate rise to 13.6%. During this same time period, average asking rental rates fell to $25.97 per s/f from $26.30 per s/f. These figures offer an advantage for both tenants and buyers. For tenants, keeping rental costs low is crucial during tough economic times. It also brings about better opportunities for investors who are looking to purchase. Owners are now offering more sweetened deals to tenants looking to rent their spaces. "Concessions are a constant," according to the Brokers Society. Owners are now tempting people to rent by reducing rents, improving office space or buildings, paying for moving expenses and sometimes offering free rents for a period of time. With demand for L.I. office buildings likely weakening in the near future and the supply of new construction projects increasing in the pipeline, the result will be a decline in rental rates over the next few quarters. In order to keep occupancy rates high and portfolios producing income, we expect property owners on L.I. to be more aggressive in making deals. Ron Koenigsberg is president of American Investment Properties, Inc., Garden City, N.Y.