Sandy and the Office Market Update
3rd Quarter 2012
“Sandy, the angels have lost their desire for us.”
– 4th of July (Sandy) by Bruce Springsteen.
The national economy continues to improve slowly as evidenced by unemployment dropping to 7.7%. Retail sales and consumer confidence have risen to their highest levels since 2008, and new home sales are improving fueled by record low mortgage rates.
This positive economic news has translated to an improved national office market. The national vacancy rate remains unchanged at 12.1% down from 12.3% and net absorption has been positive for six quarters in a row. The average quoted asking rental rate has increased slightly to $21.42.
However, the Long Island economy is growing at an even slower pace than the national economy. Unemployment is over 8% and sales tax revenue continues to decline. Although Nassau home prices are rising, Suffolk prices continue to drop. The one positive note for the area is the growth of high-paying, high skilled industries such as finance, professional and technical services.
The growth of these services is having a positive effect on the Long Island Commercial office market. The Nassau and Suffolk vacancy rate has fallen to 10% and the average asking rental rate is $25.58, representing a .2% increase over the previous quarter.
In the midst of these mostly positive economic trends are two looming questions. One is the result of the government negotiations to avoid the “fiscal cliff,” and the other is the long-term financial impact of Hurricane Sandy, which could climb to $50 billion plus. Either of these monetaryfinancial pitfalls could derail our fragile economic and set it on a downward spiral.
“Sandy, the aurora’s rising behind us. The pier light out the carnival life forever. Oh love me tonight and I promise I’ll love you forever.”