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News release

MELVILLE, NY

Strong Demand Drives Down Long Island Vacancy Rates, Fuels New Construction

Nassau County Class A office market shows positive absorption, declining vacancy in 2nd quarter of 2014


MELVILLE, NY, July 14, 2014 — Thriving Long Island businesses are generating strong demand for Class A office space, fueling substantial new construction. JLL noted the market’s unemployment rate, which dropped to 4.5 percent in April compared with 5.9 percent one year ago, is well below the national and New York state unemployment rate.

“The Long Island office market was characterized this quarter by overall increasing rental rates, declining vacancies and positive net absorption,” said Raymond Ruiz, executive vice president and head of the firm’s Long Island office. “The market’s private sector job count — at 1,103,300 in May — was the highest ever recorded, indicating a recovery from the recent economic downturn. We forecast a flight to quality by Long Island space users this year as new product is developed and corporate expansion continues.”

Long Island enjoyed around 100,000 square feet of positive absorption in the second quarter of the year, with Nassau County recording 148,304 square feet of positive absorption and Suffolk County posting 16,777 square feet of negative absorption. Approximately 423,000 square feet in leasing transactions were logged throughout the market in the second quarter of 2014, below the 640,000 square feet achieved in the same period one year ago, but more than the 315,000 square feet seen in the previous quarter.

Nassau County inked a number of large transactions this quarter. Dealertrack Technologies Inc. signed for a 233,000-square-foot build-to-suit at 3400 New Hyde Park Road in North Hills, Flushing Financial Corp. took 90,000 square feet at RXR Plaza in Uniondale, North Shore-LIJ Health System renewed 50,000 square feet at 600 Community Drive in Manhasset and Antech Diagnostics renewed 49,000 square feet at 1111 Marcus Avenue in Lake Success.

Sublease activity was flat in the second quarter of 2014, as Long Island two subleases signed this quarter: Baltic Linen Co. Inc.’s 7,864 square feet at 330 Old County Road in Mineola and Capital Contractors Inc.’s 20,000 square feet at 1 CA Plaza in Islandia.

Approximately 253,900 square feet of office space was under construction throughout Long Island at midyear 2014, with 35 percent of that amount pre-leased. Class A projects include Allstate Insurance Co.'s 80,000-square-foot new headquarters at  878 Veterans Memorial Highway in Hauppauge and the 54,999-square-foot The Harp Building, a medical condominium at 805 Northern Boulevard in Great Neck. In addition, the Hampton Business District in Westhampton, a nine-building complex totaling 440,000 square feet of office and industrial space, broke ground in April.

Highlights of the second quarter of 2014 include:

  • Long Island’s office market continued post healthy market fundamentals at midyear 2014, with space users displaying a clear preference for Class A product. Long Island’s overall vacancy rate rose slightly to 16.2 percent in the second quarter of 2014, an increase of 3.8 percent (or 0.6 percentage points) from 15.6 percent one year earlier. The island’s Class A vacancy rate fell to 15.7 percent this quarter, a decrease of 2.5 percent (or 0.4 percentage points) from 16.1 percent 12 months ago.
  • Overall rents in Long Island fell to $25.81 per square foot in the second quarter of 2014, a decrease of 1.1 percent from $26.10 per square foot one year earlier. The county’s Class A rents rose to $29.81 per square foot, an increase of 2.4 percent from $29.11 per square foot 12 months ago.
  • Nassau County’s overall vacancy rate fell to 15.0 percent in the second quarter of 2014, a decrease of 2.6 percent (or 0.4 percentage points) from 15.4 percent one year earlier. The county’s Class A vacancy rate dropped to 14.3 percent this quarter, a decrease of 10.6 percent (or 1.7 percentage points) from 16.0 percent 12 months ago.
  • Suffolk County’s overall vacancy rate rose to 18.1 percent in the second quarter of 2014, an increase of 13.1 percent (or 2.1 percentage points) from 16.0 percent one year earlier. The county’s Class A vacancy rate grew to 18.3 percent this quarter, an increase of 13.0 percent (or 2.1 percentage points) from 16.2 percent 12 months ago. Suffolk County vacancy rates are expected to remain at elevated levels through 2014 due to Allstate Insurance’s consolidation efforts.
  • The Nassau County Industrial Development Agency and the Suffolk County Industrial Development Agency continue to provide business enticements, including tax incentives, to boost Long Island’s economy.

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JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2013, the New York tri-state team completed approximately 25.9 million square feet in lease transactions, arranged capital markets transactions valued at $2.1 billion, managed projects valued at nearly $7.0 billion, and oversaw a property and facilities management portfolio of 95.3 million square feet and an agency leasing portfolio of 67.0 million square feet.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.