Long Island Commercial Real Estate Market Report :: Q2 2016
As reported quarterly, in this article we will provide you with Long Island’s commercial real estate market report for the second quarter of this year. Marking the halfway point of 2016, we will cover Long Island’s retail, office, and industrial markets. To most easily digest this information, we will break it down simply by market with a focus on vacancy rates, rental rates, and cap rates.
First we’ll review Long Island’s Retail Market. Nassau and Suffolk experienced minimal change in retail market conditions from the first to the second quarter of 2016. The vacancy rate slightly decreased from 3.9% in the first quarter to 3.8% in the current quarter. Over the past four quarters, the retail market has seen an overall steady decrease in the vacancy rate, which suggests a healthy and secure market.
As for rental rates, they have decreased from the first quarter ending Q2 with rental rates at $25.05 per square foot. This represents a 0.2% decrease in rental rates in the current quarter, however a 0.48% increase from four quarters ago. These are very positive numbers for Long Island’s retail market. Regarding cap rates, cap rates have been lower in 2016, averaging 5.65% compared to the same period in 2015 when they averaged 7.00%.
Next, looking at Long Island’s Office Market, we continue to see steadiness with minimal change for the second quarter of 2016. The vacancy rate in the Nassau and Suffolk County office market slightly decreased from 8.6% at the end of Q1 to 8.3% at the end of this year’s second quarter. However, over the past four quarters, the vacancy rate has been on a steady decline. This decreasing trend is a sign of a healthy office market and job market.
Rental rates are up over the previous quarter ending the second quarter of 2016 with rates at $25.45 per square foot. This represents a 1.1% increase in rental rates from the end of Q1, where rental rates were reported at $25.18 per square foot. As for cap rates, they have been higher in 2016, averaging at 7.85% compared to the same period in 2015 when they averaged at 7.50%.
Lastly we have Long Island’s Industrial Market. The Nassau and Suffolk
County industrial market ended the second quarter of 2016 with a vacancy rate falling to 3.2% from 3.3% at the end of the first quarter. We’ve seen a relatively steady and continual decrease in the vacancy rate for the industrial market over the past four quarters, encouraging a stable market here on Long Island.
As for rental rates, we’re seeing the slightest decrease in rates. The average rental rate for industrial space was $9.98 per square foot at the end of the second quarter of 2016. This represents a 0.1% decrease in quoted rental rates from the end of Q1 2016 when the rental rate average was reported at $9.99 per square foot. Lastly, cap rates have been much higher in 2016, averaging 18.00% compared to the majority of 2015 when they had averaged 6.75%.