The National economy continued it’s slow but steady expansion into the second quarter of 2017. The Gross Domestic Product, (“GDP”), expanded at 2.7% significantly higher than the 1st Quarter GDP at 0.7%. Unemployment maintained its record lows of 4.3% and consumer confidence continued it’s positive trend. The housing sector remains upbeat with demand outpacing supply.
This slow but steady growth is reflected in the National office market’s vacancy rate hovering at 9.6% where it has been for the previous three quarters. The average asking rent remained at $24.41 PSF the same as the first Quarter of 2017. The difference between the Central Business Districts, (“CBD’s”) and the suburban markets also remained steady: $31.33 asking rent for the CBDs and $22.72 for the Suburban markets.
Long Island’s economy followed the national trend. The LI unemployment rate has remained at 3.9%, it’s lowest rate since 2007. Wage increases are rising steadily being led by the Technology Industry. Consumer and business confidence remains strong although sales tax collection, (an indicator of consumer spending), remains soft due to incessant internet shopping. The LI housing sector is also strong with sales and prices rising for both Nassau and Suffolk counties.
Long Island’s positive economic news has not translated into the LI commercial office market. The office vacancy rate has been increasing steadily for the last four quarters from 6.9% in the 3rd Quarter 2016 to its present high of 7.2%. The average asking rent has had a slight uptick to $25.39 representing a 0.4% increase over the 1st Quarter of 2017. However, vacancy rates under 10% are considered a tight market favoring landlord’s interests. Net absorption continues to be negative for the 4th quarter in a row. Negative absorption means more space has become available on the market than has been leased. The increasing vacancy rate and negative absorption is due to large companies moving out of their space. Some of these moves include Sanford Brown College moving out of 53,000 square feet at Garden City Square, Garden City; Antech Diagnostics, Inc. moving out of 48,000 square feet at 1111 Marcus Avenue, Lake Success and MetLife Financial Services moving out of 45,421 square feet at 2929 Expressway Drive North, Hauppauge.
One of the larger leases signed on Long Island in the last year was EC Infosystems, Inc. leasing 20,777 square feet in the OMNI in Mitchel Field, NY. EC Infosystems is a major supplier of billing and data services to the deregulated energy industry, www.ecinfosystems.com. Started in 1995, EC has over 125 employees in its Long Island, NYC and Allentown, PA locations. EC Infosystems’ interests were represented by the author of this market report, Ross M. Selinger, President of Selinger Enterprises, Inc. and The OMNI was represented by Jason Forte, Senior Vice President at RXR Realty.
For additional information re the Long Island office market visit www.SelingerEnterprises.com.