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Selinger Enterprises, Inc.

471 N. Broadway
Suite 407
Jericho, NY 11753

Tel: 516-222-7974
Fax: 516-719-8698

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L.I Market Watch

First Quarter 2009 Report

July 7, 2017

Ross Selinger

“The economy has fallen off a cliff” succinctly said by Warren Buffet. This description will suffice instead of this column’s usual statistics such as GDP, unemployment, consumer confidence and inflation. We have all become armchair economists as our 401k’s shrivel up and the media pounds the bad news. So what is the effect on the commercial real estate market?

Over the past five years, building owners have enjoyed spiking rental rates, reduced concessions, workletters, and tougher leases. Prices of commercial buildings rose to levels unsustainable by their rental stream. The National Office Market reached 11.95% vacancy and $26.25 average rent. Finally, at year’s end 2008, the bubble burst as the vacancy rate rose to 12.75% and the average rent fell to $24.48.

Landlords have reduced rents, increasing concessions and workletters to compete with each other and sublease space. Savvy companies with good credit are making deals not seen in years. Other companies are renegotiating their leases to reduce their rents or shorten the terms.

Long Island has so far remained somewhat above the fray. The vacancy rate remains steady at 10.0% but the average rent dropped to $27.04, down $1.00 PSF since mid 2008. This depicts buildings remaining full but landlords negotiating aggressively.

Nobody knows when this downward spiral will hit bottom. Until then, shrewd companies are using the services of tenant reps, skilled and experienced at negotiating on their behalf. This has proven to be the most effective strategy until the “economy begins to climb back up the cliff”.

– Ross Selinger

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