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Long Island positive absorption nearly doubled the figures seen in 2014; Nassau and Suffolk account for about 1.3 MSF of total positive absorption in 2015
MELVILLE, NY, February 17, 2016 — Developers’ ongoing efforts to convert Long Island industrial product to residential and retail uses continue to displace the market’s traditional industrial occupiers. Furthermore, the rapid gentrification of Brooklyn and Queens neighborhoods in 2015 drove industrial tenants east into Nassau and Suffolk counties, according to JLL. This shift in demand, along with lack of available land parcels throughout Long Island, led to the overall vacancy rate declining 150 basis points from a year ago to 2.2 percent, and will continue to place additional downward pressures on vacancy rates.
“With an increasing number of industrial tenants from Brooklyn and Queens seeking to relocate to Nassau and Suffolk counties, rents will continue to trend upward through 2016,“ said Reid Berch, Executive Vice President with JLL’s Long Island industrial team. “The increasingly competitive Long Island industrial market will provide landlords with the leverage to raise rents. We see strategically located, newer, high-quality warehouse space with ceiling heights greater than 24 feet generating the largest pricing gains.”
Strong leasing activity in 2015 fueled absorption volumes of 1.67 million square feet. Nassau and Suffolk counties accounted for nearly 1.3 million square feet of the total positive absorption, followed by Queens, with 391,000 square feet.
Limited supply of quality industrial buildings for sale remained the biggest challenge for potential buyers throughout Long Island. The average sales price in Nassau and Suffolk counties rose to $78.00 per square foot this year, compared to less than $75.00 a year ago. An increasing number of quality industrial buildings in prime locations sold for more than $100.00 per square foot. Among these properties were 55 Mall Drive in Commack, which was sold to Reiko Wireless for $137.55 per square foot, 85 Engineers Road in Hauppauge which was sold to RSM Electron Power for $113.11 per square foot, and 201 Grumman Road West in Bethpage which sold for $104.12 per square foot. The progressive tightening of the Long Island industrial market will maintain upward pressure on sale prices for quality industrial properties.
Other highlights from JLL’s fourth-quarter 2015 Long Island industrial market report include:
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JLL is a leader in the New York Tri-state commercial real estate market, with more than 2,000 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 investment sales transactions valued at more than $5.4 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. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 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.
George Shea, Mark Faris