Long Island Office Market Sizzles
Almost 4 million square feet of office space has changed on Long Island so far this year and the anticpated sale of the 1.4-million-square-foot EAB Plaza by the Moinian Group to Reckson Associates is only fueling the fire. Leasing remains strong, but office vacancies are up due to new construction and big blocks coming onto the market. Sutton & Edwards' Alan Rosenberg analyzes market conditions.
Lake Success (PRWEB) July 9, 2005 -- Long Islands commercial real estate market is hot, but brokers in the region are busy negotiating office building sales, as well as leases. Alan Rosenberg, president of Long Islands largest commercial real estate services firm, Sutton & Edwards Inc./TCN Worldwide said.
The concentration of the business right now is on the sale of real estate," Rosenberg said. Every little building thats available is for sale. Smart sellers are taking advantage of the record prices and equally smart Buyers are capitalizing on the low interest rates before they are gone."
Demand for office building investments is creating opportunities that werent available before," the veteran Long Island broker said.
Deals totaling more than 3.75 million square feet have been completed so far this year and included these transactions:
- The $300 million acquisition of the 2-million-square-foot Tilles portfolio by Westchester-based GHP Holdings
- GHPs purchase of 400,000 square feet of offices from Great Neck-based Jobco Inc.
- The purchase of 293,000 square feet of offices in Great Neck and Manhasset from Mack-Cali Realty Corp. by an investor group that includes Manhattan-based Carlton Advisory Services
- The acquisition of the 630,000-square-foot Gateway at Lake Success office complex by Manhattan-based Stellar Management from a fund managed by GE Capital.
- Apollo Real Estate Advisors, L.Ps purchase of JP Morgan Chases three office properties in Hicksville totaling 425,000 square feet.
Despite strong sales, office leasing has become less robust as new space availabilities have come on the market at a time when the economic growth on Long Island has leveled off.
At the end of the second quarter of 2005, the office vacancy rate for Nassau and Suffolk Counties was 10.6 percent, up from 10.2 percent at the end of the first quarter, according to figures compiled by Sutton & Edwards. The average asking rent for office space also rose, to $25.80 per square foot per year, from $25.43 three months earlier.
The vacancy rate for Class A space in the bi-county region climbed to 12.94 percent at the end of June compared with 10.76 percent at the end of the first quarter of 2005. The amount of available Class A space rose by 400,000 square feet during the latest three months due to the addition of newly constructed properties available for lease and several large blocks of space becoming available in the eastern Nassau and mid-Suffolk submarkets. The average asking rent for Class A space dipped slightly during the quarter, to $27.42 per square foot, from $27.48.
Even so, Rosenberg said developers completing new office projects will have little trouble finding tenants. New buildings get rented," he noted Increased rental prices are not the obstacle." New office buildings have been completed or are nearing completion in Lake Success, Woodbury and Melville and new office projects are under way in Jericho and Melville.
Meanwhile, the market for leased industrial space on Long Island picked up strength.
The industrial market has definitely improved," said Rosenberg, noting. Theres very little being built."
Islandwide, the industrial vacancy rate was 5.56 percent at the end of the second quarter of 2005, compared with 6.72 percent three months earlier, according to Sutton & Edwards. The average asking rent for industrial properties rose to $10.42 per square foot from $10.10.
The second-quarter shift in industrial space was felt sharply in Nassau County, where the vacancy rate fell to 5.43 percent, from 8.02 percent three months earlier. The average asking rent in Nassau edged higher to $11.17 per square foot, from $11.09 at the end of the first quarter. In Suffolk County, the second-quarter vacancy rate also fell, to 5.62 percent, from 6.04 percent three months earlier, as the average asking rent climbed to $9.66 per square foot, from $9.12.
Founded in 1962, Sutton & Edwards Inc. /TCN Worldwide is Long Islands premier commercial real estate services firm. Headquartered in Lake Success, NY, the firm employs 47 real estate specialists providing integrated leasing, investment sales, property management and advisory solutions. To find out more about Sutton & Edwards, please call 1-516-328-6500, or visit the firm's Web site at www.suttonandedwards.com.
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