Long Island continues to attract investment in stable market.

"Commercial real estate fundamentals are strong in most international markets," stated: NAI Long Island, principal, executive director, Carmine Inserra.

Locally, stability is consistent to the Long Island market and is expected to continue through 2007. Long Island is ranked 16th highest among the nation's 922 metro markets in buying power, and the highest per capita income in the nation.

Long Island's economy added 7,500 new jobs in June 2006, a slight increase from a year before. These new jobs helped push the Island's unemployment rate down to 3.8 % from 4.1% a year ago, well below the national average.

Real estate executives and residents continue to monitor the Nassau Hub, easily the Island's largest and most controversial project.

In 2006, after a long RFP process, the County officially chose the Lighthouse development, a joint venture between Charles Wang, owner of the NY Islander's and Reckson Associates. The revised plan for the 77-acre site calls for a mixture of residential, sports facilities, commercial and significant transportation upgrades.

Office vacancy rates were down slightly from 2005 in 2006 with the overall rates at 9.2%, Class A space at 11.0%, and Class B at 10.4%. In January 2007, SL Green acquired Reckson Associates Realty Corp. for approximately $6 billion. The transaction includes the acquisition of 30 properties encompassing approximately 9.2 million square feet, of which 5 properties encompassing approximately 4.2 million square feet are located in Manhattan. Simultaneously, the company also sold approximately $2.0 billion of the Reckson assets, as a purchasing venture, which included certain members of Reckson's senior management.

In addition, We're Associates broke ground on a 136,000 s/f office building at 50 Jericho Quadrangle, which had 41,000 s/f pre-leased to law firm Nixon Peabody, LLP. In another We're property, 300 Jericho Quadrangle, Cablevisions 300,000 s/f of sublease space, put on the market in 2003, has been almost completely absorbed, another indication of the strong market.

The industrial market remained very strong in 2006 with overall vacancy rates at 4.0%, down from 2005. Warehouse space, which accounts for approximately 94% of the inventory, boasts vacancy rates of 3.7% while flex space vacancy Long Island attracts investment

rates stands at 7.4%. One of the regions largest industrial projects progressed significantly in 2006. After 3 years and numerous delays, the Town of Riverhead has agreed to subdivide Jan Burman's 500 acre Calverton parcel, 80 % of which is slated to be re-sold, with another 2 million square feet of industrial and office space to be built within a decade. On the site, Ozone Lumber plans to build a 60,000 s/f building, and Robert Birnbaum plans 300,000 s/ f of rental units.

The retail market remained very strong due to Long Island's buying power, fueled partly by another record year of Wall Street bonuses. The battle over Taubman's proposed 860,000 s/f mall currently continues. Taubman has commitments for over 65% of the space including Barney's New York, Neiman Marcus, and Nordstrom.

Another significant retail development project, which has received approvals, is Blumenfeld's 800,000 s/f Tanger Outlet to be built on 81 acres in Deer Park. Set to open for the 2007 holiday season, and to be named the Arches of Deer Park, the $200 million project will resemble an outdoor Italian shopping plaza and is expected to draw shoppers from up to 75 miles away.