2012 Global Market report - NAI Global

Long Island, New York
New York City, New York
Contact
NAI Long Island
+1 631 270 3000
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
5,023,919
4,879,773
2,616,956
$104,291
Long Island continues to feel the effects of the recession
but tenants, owners and investors remain optimistic but
cautious. Unemployment rates remain at 6.9%, below the
national average but high by local standards. High real
estate taxes and the lack of affordable housing continue
to be the largest problems for the region and obstacles to
significant job growth
Long Island’s huge buying power has caused the retail
sector to improve. Equity One broke ground on a 330,000
SF retail project in Westbury, the largest development in
the region scheduled for completion in late 2012. Although
most of their requirements have changed, tenants are
aggressively looking for locations. LA Fitness opened four
locations, Shop-Rite opened several new locations and BJ’s
Warehouse committed to 120,000 SF in Garden City.
While there is activity in the office sector, vacancy has
increased slightly to 11.7% for Class A and 10.8% for Class
B. A significant amount of sublet space continues to exist
leaving choices for tenants. Landlords continue to offer large
rent concessions to attract tenants. Two of the larger deals
were the lease of 55,000 SF by Astoria Federal in Jericho
and the sale of 538 Broad Hollow Road, a 184,000 SF office
building In Melville.
Industrial vacancy has dropped to 5.2% from a year ago,
mainly due to the lack of capital preventing users from
buying. However, rents remain low in this sector. By far the
largest project is Steel Equities’ purchase of 100 acres in
Bethpage previously occupied by Grumman. Activity has
been brisk for the site which contains 2.4 million SF of
existing and new space.
Activity in the investment market remains low as lenders
continue with lengthy workouts on defaulted loans. Because
of the lack of distressed sales, institutional investors have
flocked to stable investments that have come to market as
evidenced by the $24 million sale of 1600 Stewart Avenue,
the $41 million sale of 5000 Corporate Court in Holtsville
and the $43.5 million sale of Independence Shopping
Center in Selden.
Contact
NAI Global New York City
+1 212 405 2500
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
18,875,151
18,849,334
9,670,017
$97,364
With over 425 million SF of office space, Manhattan is by
far the largest office market in the United States. It is the
quintessential international hub for media, fashion, technology,
law, culture, healthcare and higher education; the home of
the global financial services industry and the headquarters
for more Fortune 500 corporations than any other city in the
country. Over the past year, New York City has had a slow
but steady economic recovery. However, the economic
recovery has yet to result in meaningful employment growth
in the city, with the city’s unemployment rate, currently at
8.7% (2011) vacillating between 8.6% and 8.8% throughout
September 2011.
The economic recovery spurred historically high levels of
leasing activity in the first half of 2011, with vacancy rates
declining and asking rents rising throughout most of
Manhattan. Over the past twelve months asking rents in the
Midtown Class A market have increased by 12% to
$64.48/SF while vacancy rates have declined by 8.5% to
13%. Meanwhile, asking rents in Midtown South’s Class B
market have increased by 10% to $44.29/SF while vacancy
rates declined by 26% to 7.8%, one of the lowest vacancy
rates in the country. Downtown, however, has yet to turn the
corner toward improvement, with Class A asking rents
declining by $0.12 to $39.81/SF and vacancy rates increasing
by 22% to 17.4%.
Manhattan’s retail market continues to perform strongly,
especially in the city’s high-end retail corridors, where luxury
retailers are attracting foreign tourists flocking to New York
City to take advantage of the dollar’s depreciating value.
Manhattan’s investment sales market surged in 2011, as
strong market fundamentals triggered aggressive pursuits
for core assets with stabilized cash flows and potential for
long-term capital growths. The strong demand has resulted
in a 237% increase in investment sales volume (as of
Q3 2011) and significant cap rate compression, with most
Manhattan properties trading with a cap rate of 3% to 5%.
Median
Household Income
$80,812
Median
Household Income
$65,799
Total Population
Median Age
39
Total Population
Median Age
37
Long Island At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
N/A
N/A
N/A
30.00
26.00
22.00
N/A
N/A
N/A
$ 36.00
$ 32.00
$ 26.00
N/A
N/A
N/A
$ 33.00
$ 29.00
$ 24.00
N/A
N/A
N/A
11.70%
11.70%
10.80%
Bulk Warehouse
Manufacturing
$ 4.50
N/A
$ 7.00
N/A
$ 5.75
N/A
10.70%
N/A
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
14.00
N/A
18.00
20.00
60.00
$ 18.00
N/A
$ 28.00
$ 40.00
$ 120.00
$ 16.00
N/A
$ 23.00
$ 30.00
$ 90.00
16.60%
N/A
5.00%
5.00%
5.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
$
N/A
500,000.00
N/A
$ 1,000,000.00
Land in Industrial Parks
$ 300,000.00 $ 600,000.00
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
500,000.00
800,000.00
N/A
$ 1,000,000.00
$ 2,500,000.00
N/A
New York City At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
mIdtoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
mIdtoWn soutH offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
retaIl
$
$
$
$
$
$
N/A
37.00
24.00
N/A
35.00
24.00
N/A
29.00
23.00
$
$
$
$
$
$
N/A
145.00
70.00
N/A
65.00
65.00
N/A
72.00
48.00
N/A
$ 64.48
$ 42.47
N/A
$ 57.04
$ 44.29
N/A
$ 39.81
$ 35.83
N/A
13.00%
11.30%
N/A
7.00%
7.80%
N/A
8.20%
16.70%
Midtown
$ 43.00 $ 2,500.00 $ 146.00 4.60%
Midtown South
Downtown
$
$
30.00
39.00
$
$
575.00
300.00
$ 102.00
$ 106.00
3.80%
3.20%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2012 Global Market Report n www.naiglobal.com 119