MELVILLE, NY-Long Island’s office sector finished 2013 with the lowest vacancy rate in five years on the strength of improving fundamentals and leasing activity, Jones Lang LaSalle said Tuesday. However, the firm noted that Suffolk County has seen vacancies tick up recently.
“This past year represented a major turning point for Long Island, with the market benefitting greatly from rising employment and strong transaction volume,” says EVP Raymond Ruiz, who heads JLL’s Long Island office. The island’s office market posted “the lowest vacancy rate we’ve seen in the past five years and leasing activity has reached a four-year high. Companies seeking aggressive leasing options can still find them in all submarkets across the island.”
The island’s office marketposted more than 2.2 million square feet of completed leases in ‘13, up significantly from 1.7 million square feet in 2012, but still short of the 2.8 million square feet recorded in 2010. JLL says LI tenants appear to be signing more new direct deals, with sublet activity declining about 65% year-over-year.
Overall rents in Long Island declined less than 1% to $26.12 per square foot in the fourth quarter of 2013 from $26.20 per square foot one year earlier. Class A rents grew to $29.93 per square foot, up 2.5% from $29.21 per square foot the year prior.
More than half of the leasing transactions recorded last year were for Nassau County properties. The county’s overall vacancy rate fell to 16.2% in Q4, down 3.6% from 16.8% one year earlier.
Suffolk County’s vacancy rate rose toward the end of the year, driven mainly by Allstate Insurance Co.’s decision to vacate four separate buildings in Hauppauge. The insurer will consolidate its regional headquarters into an 80,000-square-foot office property under construction at 898 Veterans Memorial Highway. Suffolk’s vacancy rate—17.8% at the end of Q4, up from 17.1% a year earlier—is expected to remain at elevated levels throughout the year.