Spike in Long Island office rents is forecast.

Leading Long Island commercial real estate broker Herb Agin forecasts that office rents on Long Island will spike over the next two to three years.

"You're going to see sticker shock," Agin, chief executive of Lake Success-based Sutton & Edwards Inc., told a real estate executives meeting.

He said that once the office vacancy rate Nassau and Suffolk Counties hits 6 percent "expect huge spikes" in rents, as landlords who have seen the cost of construction outpace the rise in rents, seek to catch up.

Rents, he told a meeting of the CoreNet Global Long Island Chapter, will rise by a minimum of 10 to 15 percent from a current base asking rent of about $30. Rents for new buildings, he said, could reach as high as $35 per square foot.

The office vacancy rate in Nassau County is below 8 percent and a little below 10 percent in Suffolk County, Agin said, noting that the 10-percent figure is a "magic number at which the pendulum swings from too much product to a scarcity of product."

Agin cited the paucity of land for new office development, the unwillingness of lenders to finance a "spec" building--one for which no leases have been signed, and the region's limited accessibility as factors that limit new office construction in the region.

Moreover, he said, land once considered prime sites for office development are going for residential and retail uses, which offer higher returns to developers.

Long Island ranks seventh among 60 U.S. real estate markets as most attractive to property investors, because property owners expect cap rates, the rates of return on their holdings, to rise from the current low level of about 7 percent.

He said 1.5 million square feet of new office space will become available in the region over the next two years as space currently owned by JPMorgan Chase in Hicksville becomes available and office projects now underway or proposed in Melville are completed.