According to CBRE Group Q2 2016 Market Report: Strong Fundamentals Signal Dynamic Upswing in LI’s Office Sector

Spurred by strong leasing activity of 549,000 square feet during the second quarter of 2016, Long Island’s availability rate dropped to its lowest level in almost eight years, according to CBRE Group’s Q2 2016 Office Market Report. In fact, the market’s availability rate of 13.7 percent was nearly one and half points below the figure recorded during the same time last year. Thanks to the increased demand by a diverse group of space users, Long Island also posted above average positive absorption and slightly higher rental rates.

The market’s lower availability rate is the big story for Long Island. Nassau County’s second quarter overall availability rate of 11.9 percent is the lowest since 2007. When we look at Class A office space in Nassau County the availability rate is even lower at just 10.2 percent. This figure includes 120,000 square feet of space still under lease by JP Morgan Chase at 900 Stewart Avenue, which was recently vacated. Without this space as part of the calculations, the Class A availability in Nassau would be a mere 9.1 percent.

In terms of leasing activity, Long Island’s Western Suffolk (Melville) submarket was the most active with transactions totaling 226,000 square feet. The largest deal was New York Life Insurance Company’s 87,780-square-foot lease at 520 Broadhollow Road, which along with Stellae Internationals’ purchase of the 169,405-square-foot 50 Marcus Drive removed a vast amount of vacant space from the market.

Activity in Western Suffolk was followed by Central Suffolk, which posted 132,000 square feet of leasing. Major transactions in Central Suffolk included Cintas’ 33,299-square-foot commitment at 2929 Expressway Drive North in Hauppauge, and an 18,600-square-foot lease at 102 Motor Parkway by Paychex in Hauppauge.

As a result of the robust leasing activity, Long Island posted 393,000 square feet of positive net absorption. Suffolk once again led the way with 295,000 square feet of positive absorption, which Nassau County recorded positive net absorption of 98,000 square feet.

Investment Sales Market on Long Island Continue Climb

Long Island continues to be a hotbed for investors. During the second quarter of 2016 investment sales totaled $63 million as four office buildings changed hands. The most noteworthy transaction was Kimco Realty’s $29.75 million acquisition of 500 North Broadway, a 147,183-square-foot office building in Jericho, NY. Given the lack of new construction on Long Island, sales of well-located, quality office buildings will continue to play a major role in the investment sales arena.

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.