Queens, LI among lowest vacancy rates across country.

Compared to most office markets in the United States, Queens and Long Island continue to maintain two of the lowest office space availability rates, according to Insignia/ESG's Research Services Group. At the end of 2002, the availability rate in Queens was 10.1%, second only to Washington, D.C. at 6.2%. Long Island's 11.3% availability rate was third lowest in the nation, ahead of 25 other major markets including Miami at 16.1%, Pittsburgh at 19.5% and Atlanta at a whopping 26.1%.

Last year at this time, Queens and Long Island ranked second and fifth in the nation. The Long Island markets' stability in an uncertain, lackluster economy is strong testimony to the region's many attributes:

* A diverse work force, comprised of over 90,000 businesses in Nassau and Suffolk Counties

* Long Island's successful transition in the 1990's from a defense-dependent industrial base to a multi-faceted economy

* Excellent schools in Queens, Nassau and Suffolk

* Easy access to Manhattan and the tri-state area.

Here are a few highlights of our overall stable performance: On the Island, Nassau County reported a low 9.8% availability rate, while further east Suffolk registered 13.6% a sharp contrast to office space availabilities elsewhere in the Tri-state area. For example: Westchester County's 15.5%, New Jersey's 18.3%, and Fairfield County, Connecticut's 18.6%. To the west in Queens, the Northern submarket registered 10.9%, again below most other markets.

Nassau/Suffolk

Overall, available space in Nassau-Suffolk counties combined increased by 7%, from 3.85 million SF to 4.11 million SF during the year, due mostly to sublease space returning to the market. Sublet availability, up 20% from last year, peaked at 1.15 million SF at year-end, comprising 28% of total available space, up from a 25% share at the end of 2001. Direct space was up only 2%, at almost 3 million SF. While other areas have numerous sublet blocks on the market, Island-wide only one block of sublet space exceeded 100,000 SF at the end of 2002.

So office trends have been stable on Long Island with the availability rate only fluctuating between 10.4% and 11.3% over the past two years. In terms of demand, smaller lease transactions were reported during the year with none exceeding 100,000 SF. Even so, leasing activity still outpaced last year's volume by 1%, totaling 2.09 SF in 2002. When I look at all the economic difficulties the nation endured in 2002, the Long Island office market outperformed the rest of the country and is well positioned to ride the wave of economic recovery whenever it evolves.

Queens

The Queens office market exhibited stability throughout 2002 with the availability rate moving up only slightly, from 9.6% to 10.1%. While most markets across the country continued to report mounting sublet availability, no significant sublet offerings returned to the market in 2002 in Queens. In fact, sublet space declined over the year. Most notably, Jet Blue subleased 112,000 SF from RCN Corp. in Forest Hills, the largest lease transaction reported in 2002. However, overall soft demand resulted in a dramatic slowdown of leasing activity with only 289,000 SF reported for the year - a record low for Queens.

Factors like these, plus Queens' accessibility to Manhattan, its easy access to both major New York airports and compelling rental savings compared to space in New York City, should enable the area to attract tenants to the borough. Nevertheless, while Queens has been relatively stable, future demand for office space is contingent upon clearer signs of an economic recovery.