Rent are flat in the Long Island community-neighborhood shopping center market, and vacancy inched up slightly in the second quarter. Fortunately for this market, vacancy increased only 10 basis points over the quarter, to 5.2%, and is in fact down 70 basis points year-over-year. The vacancy rate for power center space was 5.0%, down 210 basis points from 12 months earlier. The community-neighborhood center vacancy rate remained unchanged through August. Net absorption for this sector has been uneven this year, posting 20,000 square feet of positive demand in the first quarter and 22,000 square feet on the negative side in the second quarter. July and August posted negative 4,000 and positive 2,000 square feet, respectively, so demand has yet to establish itself this year.
Fortunately the absence of demand takes place during a construction drought. Of current projects in the planning stage, only the Artist Lake Power Center at Middle Country and Currans Road, in the Brookhaven/East Suffolk submarket, has a projected completion date. The project is forecast to complete in June 2014 and is planned for 389,000 square feet. Reis forecasts community-neighborhood vacancy to finish the year at 5.3%, showing no great change, and decline slightly afterward.
Reis reports second quarter asking and effective rents for community-neighborhood shopping center space at $25.49 psf and $22.75 psf, both unchanged over the quarter but up minimally at 0.2% and 0.3% over 12 months. No change is recorded through August. Going forward, Reis does not expect any strong improvements in rents in 2012, as asking and effective rents are forecast to post gains of only 0.3% for all of 2012. As noted in the previous Observer, not until the outlying years of the Reis forecast period—2014, to be exact—does Reis foresee asking and effective rents to both post annual increases exceeding 2.0%. The average asking rent for power centers, meanwhile, is $32.00 psf, up 0.3% from a year earlier.