Long Island’s office leasing market rebounded during the first quarter of 2019. Leasing activity reached 429,210 square feet (sf), yielding the market’s strongest quarter in almost three years. Strong tenant demand lead to most submarkets recording quarterly and year–over–year improvements in deal volume with Western Suffolk registering the largest increase with 252,498 sf of new deals signed. Western Suffolk’s activity accounted for 58.8% of all leasing activity.
The largest lease of the quarter was Newsday, LLC’s 130,000–sf lease at 6 & 8 Corporate Center Drive in Melville. The second largest lease was a renewal by 1-800 Flowers.com for 80,541 sf at 1 Old County Road in Carle Place. This sizable deal propelled renewal activity for the quarter to more than 200,000 sf.
Overall vacancy lowered 30 basis points (bps) from the prior quarter down to 10.4%. This decrease pushed the overall vacancy rate 10 bps below the region’s previous historical low set during third quarter 2018. Long Island’s overall asking rent continued to fluctuate, this time ascending to $31.29 per square foot (psf). This marked the first time in nine quarters in which the overall asking rent exceeded the $30.00-psf mark.
Looking ahead to the rest of 2019, projected employment gains will likely help fuel demand and continue to improve market fundamentals. The Long Island office market should continue to benefit from strong leasing activity throughout the near term, and we can expect market conditions to remain stable in most market segments.
In the first quarter of 2019, the Long Island industrial market had one of the strongest starts to a year since 2015. With 1.1 million square feet (msf) leased, activity exceeded totals from last quarter and presented a 62.3% hike in comparison to one year ago. The largest industrial lease last quarter was Intercounty Appliance Co.’s 308,577-sf sale/leaseback at 10 National Boulevard in Medford. This was not only the largest industrial deal in the first quarter, but the largest industrial deal on Long Island in more than three years.
Long Island’s industrial vacancy rate fell 40 bps in the first quarter to 5.2%, slightly higher than the market’s recent historical low set in mid-2018. The modest improvement came from space withdrawals coupled with steady demand. Overall asking rents modestly increased up $0.06 psf to $11.05 and growing 3.5% year-over-year. Due to the relatively tight market conditions, steady demand, and a prolonged industrial growth cycle, asking rents have now trended upward for the past 10 quarters.
As the market recorded robust demand and sales activity during the first quarter, market conditions for industrial on Long Island are projected to remain healthy for the remainder of 2019 as well. An uptick in pharmaceutical companies seeking distribution and manufacturing facilities and the continuation of Outer Boroughs users seeking more affordable alternatives on Long Island are expected to drive demand the rest of the year.