If your client is looking for commercial real estate, then now might be the best time to get in, if they haven’t done so already. The overall Long Island commercial real estate market improved at the end of last year, thanks to a flurry of leasing activity that resulted in reduced inventories and higher rents, especially with respect to industrial space.
Long Island Office Market
During the fourth quarter of 2021, the vacancy rate for the Long Island office market was 9.7%, down from 10.5% the previous quarter and 10.1% in Q4 2020, according to a recent report from Newmark. During the last three months of 2021, the office market saw a positive net absorption of 473,435 square feet (SF), finishing last year with a positive net absorption of 250,962 SF. This is a major improvement over Q3 2021, which had a net absorption of 90,740 SF, and the last three months of 2020, when it was -395,800 SF. (Net absorption is determined by the amount of square feet occupied by tenants minus the number of square feet vacated by tenants within a certain timeframe.)
Newmark also reported that the average asking rent per square foot in Q4 2021 was $28.40. This an increase from the prior quarter ($28.32/SF) and the fourth quarter in 2020 ($26.76/SF). Currently, the direct asking rent for Long Island office space is $28.38/SF.
In the Nassau County submarket, the total vacancy rate for the fourth quarter in 2021 was 9.2%, with a net absorption of 144,586 SF and a direct asking price of $30.39/SF. The Suffolk County submarket’s quarterly vacancy rate was 10.4%, with a positive net absorption of 148,939 SF and a direct asking rent of $24.33/SF.
Long Island’s office market has shown signs of stability despite signs of an uncertain economy, according to the report, citing “a dense population of qualified workers and growing demand for modern amenities.”
Long Island Industrial Market
In the Long Island industrial market, the vacancy rate declined during the last three months of 2021 to 3.5%, based on data from Newmark. That figure was lower than it was during Q3 2021 (3.8%) and Q4 2020 (4.8%). The quarterly net absorption was 502,325 SF, which is less than the previous quarter with 819,217 SF, but an improvement over Q4 2020, with -499,956 SF. The average asking rent actually fell off from the previous quarter, to $14.72/SF from $14.96/SF, but was higher than the Q4 2020 rent of $12.85/SF.
Looking at each county submarket, the Nassau County vacancy rate for industrial space was 4.8% last quarter, with a positive net absorption of 358,896 SF and an asking rent of $17.15/SF. In Suffolk County, the vacancy rate during the same time was 2.9%, with a positive net absorption of 143,429 SF and a rent with an asking price of $13.69/SF.
According to the report, demand for industrial space on Long Island is going nowhere but up. “Fueled by pandemic-driven ecommerce activity, developers have brought new spaces to the market, which are necessary to accommodate the growing presence of logistics users.”
