The 75.4-million-square-foot Long Island warehouse/distribution market has reached the 2012 mid-point in fairly good shape. Reis reports second quarter vacancy at 12.9%, down 20 basis points from the quarter before and down 110 basis points over 12 months. The rate has declined to 12.8% through July and August. After recording 761,000 square feet in 2011, net absorption has remained strong in 2012, posting 249,000 square feet in the first quarter and 157,000 square feet in the second. Thus far in 2012, Reis reports the completion of the Florence Building materials warehouse in Huntington, at 12,000 square feet. In July, a 196,000-square-foot project for Ruby’s Costume Company broke ground in Bay Shore with completion predicted for March 2013. Reis forecasts warehouse/distribution net absorption to reach 427,000 square feet in 2012, with vacancy to finish the year at 12.9%. Small annual declines are forecast to follow. Reis reports warehouse/distribution asking and effective average rents at the relatively high level of $6.60 psf and $6.01 psf for second quarter, up 0.3% and 0.8% for the period. There was no additional increase through August, but gains of 1.2% asking and 2.0% effective are forecast for all of 2012. Strong gains of around 3.5% per year are expected starting in 2014.
Long Island’s 14.6-million-square-foot Flex/R&D segment saw no new construction in 2011, and none is on tap for 2012. Second quarter vacancy is reported at 13.3%, down 30 basis points for the quarter and down 110 basis points over 12 months. By August the rate had fallen to 12.8%. Thus far in 2012 Reis reports net absorption at 160,000 square feet, after 43,000 were recorded in the second quarter. Thus the market has nearly reached the 176,000 square feet recorded for all of 2011. Reis reports average asking and effective rents of $9.02 psf and $7.92 psf, up 0.3% and up 0.6%, respectively, from the first quarter. These measures are down 0.8% and up 0.5% over 12 months. Reis forecasts gains of only 1.2% asking and 1.8% effective for all of 2012, a pattern which will repeat in 2013. Rent gains are forecast to be modest until 2014.
Newmark Knight Frank reports a total industrial vacancy rate of 5.4% in the second quarter, with limited positive net absorption for the period following negative 880,000 square feet in the first quarter. “The average asking rent for the industrial market rose to $7.92 psf in the second quarter from $7.72 psf in the previous quarter and remained above the $7.86 psf recorded one year ago.”