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News release

MELVILLE

Strong Demand for Long Island Office Space Fuels Big Drop in Vacancy Rates

Long Island recorded falling vacancy rates across all submarkets in 2016


MELVILLE, N.Y., February 13, 2017 — Long Island recorded its fifth consecutive quarter of falling overall vacancy rates in the final quarter of the year, according to JLL. The market's overall vacancy rate fell to 13.4 percent in the fourth quarter of 2016, a decrease of 20.2 percent (or 340 basis points) from 16.8 percent one year ago. Strong tenant demand for Long Island office space during the past year has suppressed vacancy rates across all submarkets and building classes.

"A surge in tenants seeking Class A and medical office space, along with transit-oriented development efforts throughout Long Island, will further push demand to Suffolk County," said Raymond Ruiz, Executive Vice President and head of the firm's Long Island office. "Western Suffolk, in particular, will benefit as healthcare occupiers in pursuit of prime office space find optimal options in Suffolk County."

Tenants leased about 2.23 million square feet of space throughout Long Island in 2016, down slightly from the 2.42 million square feet of space leased the previous year. The largest transactions recorded this quarter were both renewals, with the government of Nassau County renewing 217,000 square feet at 60 Charles Lindbergh Boulevard in Uniondale, and Merrill Lynch renewing 50,000 square feet at 1325 Franklin Avenue in Garden City.

Despite the decrease in leasing activity, far more office space was absorbed in 2016 than during the previous year. Long Island posted approximately 407,000 square feet of positive net absorption in the fourth quarter of 2016, marking the fourth consecutive quarter of positive net absorption. The market recorded positive net absorption of nearly 1.26 million square feet for the year, exceeding the total net absorption registered in 2015 by more than 1.0 million square feet.

Western Nassau County and Western Suffolk County surpassed all other Long Island submarkets in year-to-date absorption by more than 500,000 square feet, recording approximately 660,000 and 640,000 square feet, respectively. Robust activity in Western Nassau and Western Suffolk was a product of the thriving healthcare sector and healthy private sector growth in Long Island.

Numerous significant transactions closed during the final quarter of the year; notable deals included Scully Scott Murphy & Presser PC taking 22,000 square feet at 400 Garden City Plaza in Garden City; Picciano & Scahill PC leasing nearly 21,000 square feet at 1055 Stewart Ave in Bethpage; and Signature Bank signing for 16,000 square feet at 900 Stewart Avenue in Garden City.

Highlights of the fourth quarter of 2016 include:

  • Long Island's Class A vacancy rate dropped to 11.7 percent in the fourth quarter of 2016, a decrease of 20.9 percent (or 310 basis points) from 14.8 percent one year ago. Year over year, Nassau County's Class A vacancy rate declined to 9.5 percent this quarter from 11.7 percent. Suffolk County's Class A vacancy rate declined to 15.7 percent this quarter from 20.2 percent one year ago.
  • Average overall asking rents for Class A space on Long Island dropped to $28.77 per square foot in the fourth quarter of 2016, a year-over-year decrease of 1.1 percent from $29.08 per square foot. Nassau County Class A rents rose to $32.45 per square foot from $31.51 per square foot in the fourth quarter of 2015. Suffolk County Class A rents fell to $26.15 per square foot this quarter from $26.59 per square foot one year ago.
  • In Suffolk County, a number of transit-focused build-to-suits are currently proposed to attract a younger workforce. Among these include a 112,000-square-foot office building proposed at 20 Station Drive as part of the Wyandanch Village revitalization project and the 300,000 square feet of commercial space that is planned in the Ronkonkoma Hub project. The ongoing revitalization efforts in Huntington Station recently received $1.25 million from Suffolk Country for infrastructure plans.

For more news, videos and research resources from JLL, please visit the firm's U.S. media center Web page. Bookmark it here: http://bit.ly/18P2tkv.

JLL is a leader in the New York tri-state commercial real estate market, with more than 2,300 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2015, the New York tri-state team completed approximately 32.6 million square feet of lease transactions; arranged investment sales, notes, debt and equity transactions valued at more than $8.2 billion; managed projects valued at $7.8 billion; and oversaw a property management, facilities management and agency leasing portfolio exceeding 141 million square feet. 

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.