The second quarter story in the Long Island general purpose, multi-tenant office market is net absorption. After finishing 2011 with over 300,000 square feet on the negative side, and another 2,000 were returned to the market in the first quarter, second quarter followed with 125,000 square feet on the positive side. While not a great performance, it was good enough to lower vacancy 30 basis points over the quarter to 13.2%. This is the same rate as one year earlier. After a slight increase in July, the rate is back to 13.2% in August, according to Reis data. Class A vacancy is 12.4%, Class B/C is reported at 14.1%. The Long Island office market has not been a strong absorber of office space. From 2002 to 2011, 2.7 million square feet of office space was added, while net absorption totaled negative 1.4 million in that time span. It is too early to call a demand recovery here, but the market is improving on the demand front. A positive total is forecast for 2012, and a notable 406,000-square-foot net absorption total is expected for 2013.
Reis reports average asking and effective rents of $26.92 psf and $22.11 psf, both up 0.2% for the quarter, and up 0.8% and 1.0%, respectively, year-over-year. Class A asking rents are $30.61 psf, Class B/C $23.10 psf, both up 0.2% over the quarter. August data from Reis indicate no change. Asking and effective rents are forecast to rise 1.3% and 1.5% in 2012, followed by gains over 2.0% for both measures after 2013.
According to Newmark Knight Frank, second quarter total office vacancy on Long Island was 12.9%, and the total average asking rent was $26.97 psf. “Following a strong first quarter, Long Island market conditions shifted slightly in the second quarter as 9,692 square feet of negative net absorption took place,” this source recorded.