The national economy slowed down in the first quarter of 2017. Hampered by lackluster consumer spending the GDP fell to 0.7%. This was in spite of unemployment falling to 4.7% by the end of March. Housing sales were of no help decreasing by 3.7% from the previous quarter.
This poor economic news was evidenced by the National Office Market vacancy rate remaining unchanged over the previous quarter at 9.7%. This is consistent with the previous four quarters in which the vacancy rate averaged 9.8%. The average asking rent was $24.49 PSF, (Per Square Foot), for the 1st Quarter of 2017 representing an anemic 0.5% increase over the previous quarter. Nationally, the CBDs, (Central Business Districts), outpaced the suburban markets by a difference of $31.95 PSF for the CBDs and $22.75 for the Suburban markets.
The Long Island Economy remained strong ending the quarter at 4% unemployment. This was the strongest LI unemployment in a decade. Approaching full employment, Long Island Consumer Confidence remained strong. However, sales taxes fell in Nassau County representing falling sales but rose in Suffolk. This conundrum might be answered by increasing internet sales.
This mixed economic news was reflected in the LI office market vacancy rate rising to 7.3% with negative absorption at 101,317 square feet. (Absorption is the difference between space being leased and new space coming on the market. Negative absorption means more space came on the market than was leased). The average asking rent was $25.29 representing a 2.8% increase more than the previous quarter.
The Lake Success Market remains the gold standard of Long Island office space. It is being driven by the incessant demand for medical space and access to the airports and NYC. The vacancy rate for this market was 5.5% and the average asking rent was $31.36 PSF. The Melville market remained the softest on Long Island at 9.3% vacancy and average asking rents of $24.11. This information can be interpreted as the tight Lake Success market is good for landlords and the soft Melville market is good for tenants.
One of the largest sales in the past year was One and Two Jericho Plaza selling for $100,000,000 as a recapitalization. This 639,000-square foot portfolio sold to Oxford and Simpson Realty.
Ross Selinger has been Long Island’s leading Tenant Broker since 1996. Having represented hundreds of LI’s companies, he works diligently to achieve their real estate goals. His success is measured by the many loyal clients whom have consistently used Ross as their go-to real estate resource over the years.