L.I. Market Watch
An economic review of the National and Long Island commercial markets
Fourth Quarter 2011
Like rays of sunshine peeking through the clouds, positive economic news has been trickling down. Steadily declining unemployment, a strong 4th Quarter, and a gradually improving housing market are all signs of change. This positive trend has also been reflected by the improving US national office market as vacancy rates fell to 12.3% and rental rates rose to $21.59 in the 4th quarter of 2011. Most important is four consecutive quarters of positive absorption. This indicates no new construction which will cause rents to rise dramatically when the economy does recover.
Conversely, the Long Island Office Market has remained stagnant at 10.3% vacant for the last two quarters with rental rates rising by a miniscule 1.9% to $26.21. Furthermore,Long Islandhas had positive absorption in only three of the last four quarters. This negative real estate news is due to Long Island lacking the manufacturing base that is driving theUSrecovery.
As a result, the Long Island commercial real estate market remains soft – good for tenants, bad for landlords. However, some areas are softer than others. Western and Central Nassauare averaging 10% vacant with an average asking rent of $30.15. Eastern Nassau and Western Suffolkare averaging 12.5% vacant with an average asking rent of $26.00. Companies with good financials are getting excellent deals depending on the location. AllLong Island companies should continue to be aggressive if renewing or seeking office space. Long Island’s weak economy won’t last forever; soon the recovery will begin in earnest and the sun will shine again.
