The Long Island industrial market is booming! According to a recent report from Cushman & Wakefield, the overall industrial vacancy rate on Long Island has dropped to 2.6 percent. This is more than 30 percent lower than the area’s pre-pandemic vacancy rate of 4.5 percent. In each of Long Island’s industrial submarkets, vacancy rates have declined significantly over the last year, with vacancy rates cut in half or more in western and central Nassau County and western Suffolk County. The overall industrial vacancy rate in western Suffolk is just 1.1 percent!
What's the lowest industrial vacancy rate we can expect?
Commercial real estate brokers are ecstatic about the vacancy rate for industrial properties on Long Island, which are now at the lowest level in recent memory.
According to a study from Cushman & Wakefield, the industrial vacancy rate on Long Island fell to 2.6 percent in the third quarter of 2021, which is more than 30 percentage points lower than the area's pre-pandemic vacancy rate of 4.5 percent.
Over the last year, industrial sector vacancy rates on Long Island have plummeted significantly, with decline of up to half or more in western and central Nassau County and western Suffolk County. The overall industrial vacancy rate in western Suffolk is just 1.1%, according to C&W.
What's causing low vacancy rates on Long Island?
The limited availability of industrial space and ongoing supply-chain concerns have limited industrial leasing activity, which decreased all of 2021. In Q3, only 401,744 sq. ft. of industrial space was leased, which makes it the lowest quarter activity of any quarter in the past four years.
Despite the difficulties, the Long Island industrial real estate market has experienced more than 2.08 million square feet of positive absorption in 2021 by Q3, a substantial turnaround from the same time in 2020, when only 111,245 square feet of positive absorption was recorded.
Long Island industrial space rents have been rising in step with demand. The overall average asking rent for industrial buildings reached $12.45 per square foot in the third quarter, representing the seventh consecutive quarter-to-quarter rise.
Rents are expected to rise because additional industrial supply now under construction will be listed at greater rents than existing properties. C&W estimates that by the end of 2022, nearly 2.5 million square feet of new Long Island industrial space will have been developed.
Future Industrial Developments Coming To Long Island
According to C&W, by 2024, Long Island could see as much as 5-million sq. ft. of additional industrial space. Additionally, NorthPoint Development, a Kansas City-based company, intends to construct four warehouse and distribution buildings taking up over 115 acres and amassing approximately 2.5 million square feet in Yaphank. Nearby, they also plan to develop an additional 1.1 million square feet over 92 acres nearby.
Two projects from New Jersey-based Hartz Mountain Industries are also in progress in Melville. The firm is developing a 900,000 sq. ft. of logistics space in the former 49-acre Newsday headquarters. Hartz Mountain is also working on a 400,000 sq. ft. distribution complex spanning 33 acres on Spagnoli Road.
A San Francisco-based industrial real estate development firm, Bristol Group Inc. has begun rebuilding a 10.75-acre site in Commack into a 178,134 sq. ft. distribution center. Lastly, Brookfield Properties recently invested $45mm for an idle industrial plot in Hicksville, where it plans to build a warehouse and distribution center.
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