2nd Quarter 2011
The national economic malaise continues due to high unemployment, rising prices, weak consumer demand, housing and retail sales. The Long Island economy also continues to be anemic. Held back by high unemployment of 7.5%, only the healthcare industry has improved as the government, manufacturing and construction industries lose jobs. Housing also continues to drag the LI economy down with continually dropping sales and prices.
As a result of this bad economic news, the National and Long Island office markets remain soft as evidenced by their respective vacancy rates of 12.6% and 10.1%. Excluding a few major CBDs such as NYC, Pittsburgh and San Francisco, most companies nationally and regionally are uninterested in taking advantage of today’s soft market. This is evidenced by the consistency of the differences between the vacancy rates for the different classes of buildings. “A” buildings are 14.5% vacant nationally and 12.5% vacant on Long Island. “B” Buildings are 13% vacant nationally and 11.9% on Long Island. “C” Buildings are 9% vacant nationally and 7.5% locally. In other words, the A and B building markets are very soft and the C building markets are relatively tight. These numbers have been unchanged for the previous two quarters. This indicates that companies are not taking advantage of the soft markets and moving up to better buildings. They prefer to remain cautious, lean and mean. Therefore, rather than following the age old formulas for growth, the American company is instead following the new standard of “The only change is no change”.
– Ross Selinger