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News release

MELVILLE, NY

Long Island Posts One of Lowest Industrial Vacancy Rates in Nation

Transaction volume pushes down Long Island vacancy rates, drives up average asked rental rates in 1st quarter of 2015


MELVILLE, N.Y., May 14, 2015 — Strong transaction volume pushed down vacancy rates and drove up average asking rent for Long Island’s industrial product, according to JLL. For quite some time, developers converting industrial product to other uses, particularly in Queens, have steadily reduced the available inventory. The lack of available industrial product and little new construction has reduced Long Island’s industrial supply to just eight blocks of Class A space larger than 100,000 square feet throughout the market in the first quarter of 2015.

“Several big-name, ‘on-tarmac’ tenants at John F. Kennedy International Airport have leases expiring in 2015 and are in negotiations with the Port Authority of New York and New Jersey,” said Reid Berch, Senior Vice President with JLL’s Long Island industrial team. “These companies are also considering offers from the private sector, giving them unprecedented leverage in discussions for financial incentives and upgrades to existing facilities. Whatever direction the negotiations take, the market will benefit from the rehabilitation of older antiquated buildings both on and off the airport.”

The ongoing reduction in Long Island’s industrial inventory drove down leasing activity by about 46 percent this quarter compared with volume in the final quarter of 2014. The market witnessed approximately 470,000 square feet of industrial transactions in the first quarter of the year compared with 877,443 square feet in the last three months of last year.

The Long Island industrial market posted 73,000 square feet of positive net absorption in the first quarter of the 2015. Suffolk County attracted the most activity of all Long Island submarkets, posting more than 245,200 square feet in completed transactions this quarter compared with 524,080 square feet in the previous quarter. Three logistics firms signed new leases this quarter, including Stellae International, which provides logistics for the luxury industry, taking 75,000 square feet at 1 Executive Drive in Edgewood; Menlo Logistics, a supply-chain optimization specialist, signing for 40,000 square feet at 111 Wilshire Boulevard in Edgewood; and GMG Transportation, a freight management company, inking a one-year lease for 32,000 square feet at 65 Orville Drive in Bohemia.

Long Island’s industrial sector continued to see very little new construction in the first quarter of the year. All construction activity in the market is focused on Suffolk County, with three pharmaceutical facilities undergoing expansion totalling 270,000 square feet of space, this quarter.

InvaGen Pharmaceuticals Inc. is constructing a 125,000-square-foot building and AlphaMed Bottles Inc. is building a 70,000-square-foot facility, both located on Carlton Avenue in Islip on an 18-acre parcel owned by the town. In addition, Centereach-based Spirit Pharmaceuticals LLC is consolidating into a 75,000-square-foot factory under construction in the Islip Foreign Trade Zone.

Other Suffolk County projects underway included the Class B, 40,000-square-foot 17 North Belle Mead Road in Setauket, with occupancy by Islandaire planned for the second quarter of 2015; and the 60,000-square-foot 220 Roger’s Way, the first industrial building at Hampton Business District in Westhampton Beach, which is 15 percent leased to AC Lighting & Electric Supplies.

Other highlights from JLL’s first-quarter 2015 Long Island industrial market report include:

  • The overall industrial vacancy rate for Long Island decreased 80 basis points to 3.6 percent this quarter from 4.4 percent one year ago.
  • The average asking rental rate for Long Island industrial space rose 16.6 percent to $10.96 per square foot this quarter from $9.40 per square foot one year ago.

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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 2014, the New York tri-state team completed approximately 22.8 million square feet of lease transactions, arranged capital markets transactions valued at more than $3.0 billion, managed projects valued at $7.6 billion, and oversaw a property management, facilities management and agency leasing portfolio exceeding 163 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 $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000.  On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.