Nassau County sees vacancy rate drop, rent increases in all property classes
MELVILLE, NY – May 3, 2011 – (RealEstateRama) — Jones Lang LaSalle announced the Long Island office market demonstrated signs of recovery in the first quarter of 2011. The market’s improving fundamentals were led by Nassau County, which posted a considerable drop in vacancy rates and a slight increase in average asking rental rates in all property types. Suffolk County’s office market remained steady, with Class A properties recording a drop in vacancy rates and a minor increase in rents.
“Long Islanders began the new year with optimism and a belief that economic indicators were trending in a positive direction,” said Raymond Ruiz, executive vice president and head of the firm’s Long Island office. “A look back to 2010 showed negative job growth for the year, with a net 3,000 private sector jobs lost over twelve months. However, according to the Department of Labor, there has been positive job growth through the first three months of the year, with 4,200 jobs created within the health care and education sectors, a step in the right direction.”
Overall, Long Island’s office market saw vacancy rates decrease in all property types in the first quarter of the year. Overall vacancy rates dropped to 17.7 percent in the first quarter of 2011, a decrease of 5.3 percent from overall vacancy rates of 18.7 percent in the fourth quarter of 2010. Class A vacancy rates fell to 15.1 percent this quarter, a decrease of 7.9 percent from Class A vacancy rates of 16.4 percent the previous quarter. Class B vacancy rates slipped to 19.9 percent during the same time period, a drop of 3.9 percent from Class B vacancy rates of 20.7 percent at year-end 2010.
Strong interest from space users in Long Island’s Class A office properties fueled a minor increase in overall asking rental rates in the first quarter of the year. Overall rents dropped to $25.45 per square foot in the first quarter of 2011, an decrease of less than 1 percent from overall rates of $25.59 per square foot in the fourth quarter of 2010. Class A rents grew to $27.68 per square foot this quarter, an increase of less than 1 percent from Class A rents of $27.47 per square foot the previous quarter. Class B rents throughout Long Island fell to $23.81 per square foot during the same time period, a drop of 1.4 percent from Class B rates of $24.16 per square foot at year-end 2010.
Nassau County recorded a major drop in vacancy rates in all property types in the first quarter of 2011. The county’s overall vacancy rate fell to 16.2 percent in the first quarter of 2011, a decrease of 10.5 percent from the overall vacancy rate of 18.1 percent in the fourth quarter of 2010. The submarket’s Class A vacancy rate dropped to 15.1 percent this quarter, a decrease of 9 percent from the Class A vacancy rate of 16.6 percent the previous quarter. Nassau County’s Class B vacancy rates slipped to 17.2 percent during the same time period, falling 11.3 percent from Class B vacancy rates of 19.4 percent at year-end 2010.
Heavy leasing activity throughout Nassau County drove average asking rental rates up slightly in all property types in the first quarter of 2011. Overall rents rose to $27.33 per square foot in the first quarter of 2011, an increase of less than 1 percent from overall rates of $27.13 per square foot in the fourth quarter of 2010. Class A rates grew to $28.48 per square foot this quarter, a boost of less than 1 percent from Class A rents of $28.32 per square foot the previous quarter. Class B rents in Nassau County increased to $26.16 per square foot during the same time period, an increase of less than 1 percent from Class B rates of $26.06 per square foot at year-end 2010.
The most notable deals in Nassau County during the first quarter of the year were BWD Group’s lease of 68,000 square feet at 45 Executive Drive in Plainview; Healthcare Partners lease of 57,000 square feet at 501 Franklin Avenue in Garden City; and Regus’ renewal of 22,000 square feet at 1979 Marcus Avenue in Lake Success.
For the second consecutive quarter, Suffolk County posted a significant decrease in vacancy rates for Class A office space and a large increase in vacancy rates for Class B space. The county’s overall vacancy rate rose slightly to 20 percent in the first quarter of 2011, an increase of 1 percent from the overall vacancy rate of 19.8 percent in the fourth quarter of 2010. The submarket’s Class A vacancy rate dropped to 15.1 percent this quarter, a decrease of 6.8 percent from the Class A vacancy rate of 16.2 percent the previous quarter. Suffolk County’s Class B vacancy rates increased to 23.7 percent during the same time period, rising 4.9 percent from Class B vacancy rates of 22.6 percent at year-end 2010.
Suffolk County saw average asking rental rates for high-end space in the market increase slightly in the first quarter of the year, while rates for the county’s Class B buildings dropped. Overall rents decreased to $23.38 per square foot in the first quarter of 2011, a drop of 1.1 percent from overall rates of $23.53 per square foot in the fourth quarter of 2010. Class A rents grew to $26.27 per square foot this quarter, an increase of less than 1 percent from Class A rents of $26.03 per square foot the previous quarter. Suffolk County’s Class B buildings saw rates fall to $21.77 per square foot during the same time period, a decrease of 1.3 percent from Class B rents of $22.05 per square foot at year-end 2010.
Jones Lang LaSalle is a leader in the New York tri-state commercial real estate market, with more than 1,700 of the most recognized industry experts offering brokerage, capital markets, facilities management, consulting, and project and development services. In 2010, the New York tri-state team completed approximately 17 million square feet in lease transactions, completed capital markets transactions valued at $861 million, managed projects valued at more than $5.8 billion, and oversaw a property and facilities management portfolio of 83.5 million square feet.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 60 countries from more than 1,000 locations worldwide, including 185 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $41 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.
Contact:
George Shea, Mark Faris
Company: Shea Communications
Phone: +1-212-627-5766
Email: mfaris (at) sheacommunications (dot) com
