Long Island Commercial Real Estate Market Report – Q4 2016
Saying goodbye to 2016 with a final market report. In this article we provide you with Long Island’s commercial real estate market report for the fourth and final quarter of 2016. As always, this report will include 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 up is Long Island’s Retail Market.
The Nassau and Suffolk retail markets experienced minimal change in retail market conditions from the third to the fourth quarter of 2016. The vacancy rate remained at 3.7% at the close of the fourth 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 increased from the third quarter ending Q4 with rental rates at $26.45 per square foot. This represents a substantial increase of 2.8% in rental rates in the fourth quarter, and a 4.54% increase from Q4 2015. Regarding cap rates, the retail market cap rates have been lower in 2016, averaging 6.01% compared to the same period in 2015 when they averaged 6.44%.
Next we’ll look at Long Island’s Office Market.
The vacancy rate in the Nassau and Suffolk County office market increased from 7.2% at the end of the third quarter to 7.5% at the end of the fourth and final quarter of 2016. Over the past four quarters, the vacancy rate has generally been on a steady decline and so this minimal increase should not be of concern. Although the vacancy rate is higher than the previous quarter, rental rates are up over the third quarter ending the fourth quarter of 2016 with rates at $25.83 per square foot. This represents a 0.6% increase in rental rates from the end of Q3 where rental rates were reported at $25.73 per square foot. As for cap rates, the office market cap rates have been higher in 2016, averaging at 8.35% compared to the same period in 2015 when they averaged at 7.22%.
Last we have Long Island’s Industrial Market where we see minimal yet positive change.
The Nassau and Suffolk County industrial market ended the fourth and final quarter of 2016 with a vacancy rate remaining at 2.9%. However, over the majority of 2016, we’ve seen a relatively steady continual decrease in the vacancy rate for the industrial market, encouraging a healthy and stable industrial market here on Long Island. As for rental rates, the fourth and final quarter of 2016 ended with an increase in rates at $10.59. This represents a substantial 3.8% increase in quoted rental rates from the end of Q3 2016 when the rental rate average was reported at $10.20 per square foot. Lastly, the industrial market cap rates have been much higher in 2016, averaging 18.00% compared to the majority of 2015 when they had averaged 8.18%.