Long Island's industrial vacancies dip as rents climb.

Long Island's industrial vacancy rate fell by almost a half of a percentage point during the third quarter of 2006 and average asking rents continued a rapid ascent from the previous three months, according to Long Island firm, Sutton & Edwards Inc./TCN Worldwide.

Overall, the vacancy rate for industrial space in the Nassau-Suffolk two-county region dropped to 5.95%, its lowest level in a year, from 6.56% at the end of the first three months of 2006. One year ago, the industrial vacancy rate stood at 5.42%t, near historic lows

The average asking rent for industrial space in the region was $11.05 psf, compared with $10.82 in this year's second quarter and $10.36 a year earlier.

"Industrial is doing great," said Sutton & Edwards president Alan Rosenberg. "The economy of Long Island is good."

The strength of industrial leasing is due in part to the changing economics of the industrial market, Rosenberg said. Sellers, who had been asking prices of as high as $150 a square foot and who were unable to make deals, are now happy to rent out their buildings at $12 a square foot. Industrial building users, who were unwilling to buy at higher prices and now face higher interest rates, find it more worthwhile to lease.

"We're trying to promote leases with an option to buy," Rosenberg said.

In Nassau, the industrial vacancy rate at the end of the 2006 third quarter was down to 6.19 percent, compared with 6.69 percent three months earlier and 5.72 percent one year ago. Asking rents rose to $12.21 per square foot, from $11.72 in the 2006 second quarter. In the comparable year-ago quarter the average asking rent was $11.19. Nassau has approximately 49 million square feet of industrial space.

In Suffolk, which has almost twice as much industrial space as Nassau, the vacancy rate fell to 5.83 percent, from 6.5 percent in the second quarter of 2006. One year earlier, the rate vacancy in Suffolk was 5.27 percent. Asking rents in the county dropped by just pennies to $9.89 per square foot from $9.92 three months earlier. A year ago, the average rent for industrial space in Suffolk was $9.53.

The sales market, however, remains soft, said Jeffrey Schwartzberg, Sutton & Edwards Senior Director and an industrial specialist. "I see a lot of softness. I'm not surprised," he said, "Fewer people are looking to buy."