C&W: Long Island office market remaining stable.
The Long Island office market continued to strengthen and stabilize, showing an increase in asking rents, lower vacancy rates and strong investment sales activity, according to mid-year statistics from commercial real estate services firm Cushman & Wakefield.The overall vacancy rate in the second quarter registered at 10.2%, nearly stable from 10.1% at the end of the first quarter, but down significantly from the 12.4% rate reported this time last year. At the end of the second quarter, overall asking rents were $28.21 per square foot (psf), up from $26.84 at midyear 2004. Class A rents registered at $30.57psf up from $29.60 psf a year ago.
Despite the low vacancy rates, there remains a shortage of large blocks of available space. In addition, the falling vacancy rates have resulted in increased asking rents that are the highest since the end of 2001.
"The improving economy has driven demand from companies on Long Island looking to move into new space or expand their offices," said Jim Fagan, senior managing director and head of Cushman & Wakefield's Long Island, and Westchester/Fairfield County offices. Sales activity is strong, as is the leasing market, but the amount of supply has significantly decreased." Leasing activity year-to-date has accumulated over 1.13 million square feet (msf)--on par with last year's level of 1.073 msf.
Notable leases in the second quarter included that of North Shore Long Island Jewish Health Systems, which signed the largest lease on Long Island in more than a decade, for 454,000 sf at 1111 Marcus Avenue in Lake Success.
Other significant lease transactions last quarter included 1-800 Flowers.com for 90,000 sf at One Old Country Road in Garden City; and Ehomecredit Corporation which took 25,346 sf at 100 Garden City Plaza in Garden City.
Investment sales activity continued to fortify with several major transactions that occurred in the second quarter.
Apollo Real Estate Investors acquired a three building portfolio, 425,000 sf at 50, 100 and 110 Duffy Avenue in Hicksville, for $32 million. Additionally, Stellar Management purchased two 350,000 sf office buildings (1981 and 1983 Marcus Avenue in Lake Success) for $108 million; and OSI Pharmaceuticals acquired 41 Pinelawn Road in Melville, a 60,217 sf office building for $11 million.
During the second quarter new construction was completed at 40 Marcus Drive in Melville, with 50,000 square feet of space added to the market. In the Western Suffolk County submarket, 68 South Service Road in Melville, consisting of 277,081 sf is expected to be complete by year-end; and in the Eastern Nassau submarket, 135 Crossways Park Drive in Woodbury is scheduled to deliver 120,000 sf to the office inventory at the latter part of the year. Vacancy rates increases are likely upon availability of this space.
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| Title Annotation: | Cushman & Wakefield |
|---|---|
| Publication: | Real Estate Weekly |
| Geographic Code: | 1USA |
| Date: | Jul 20, 2005 |
| Words: | 472 |
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