Long Island Market Watch
1st Quarter 2018
Although the GDP grew only 2.3% in the 1st Quarter of 2018, all signs are full-speed ahead for another upbeat economic year. Unemployment has continued to drop to unprecedented levels, consumer spending and business investment are on the upswing, and earnings are beginning to accelerate. Equally important, inflation is rising very slowly causing interest rates to do the same.
This positive economic news bodes well for the National office market which remained stable at 9.3% vacant, with positive absorption rates and increasing rental rates. The positive demand for office space has been offset by the new construction that is taking place throughout the country. Upwards of 25M square feet, this new construction is keeping landlords in check, forcing them to compete for quality tenants.
The Long Island economy has also remained strong. Given its skilled workforce and incessant demand for health care workers, unemployment has also hovered around 4%. Consumer spending on Long Island has continued to grow and the housing market remains strong.
The Long Island vacancy rate for office space declined to 7% from 7.3%, placing it among the tighter office markets in the country. Absorption rates also remain positive and rental rates continue to tick upwards.
The biggest difference between the national office market and the Long Island office market is the lack of new construction on Long Island. Only two new office buildings are presently under construction. These are 805 Northern Boulevard – The Harp, in Great Neck for 60,000 square feet and 1350 Union Turnpike in New Hyde Park for 51,000 square feet. Both buildings are comparatively small and are designated for Class “A” office or medical use.
This dearth of new office space has been felt by tenants. They are becoming increasingly challenged to find good office locations at competitive pricing. A tenant rep broker, with no allegiance to landlords, is best suited to find good leasing opportunities and to negotiate competitive deals for tenants.
Ross Selinger, MCRE, MID President, Selinger Enterprises, Inc.