Long Island industrial vacancy rate 40% lower than pre-pandemic
Asking rents rose for seventh straight quarter: report
Records continue to fall in the industrial real estate market, powered by an e-commerce boom accelerated by the pandemic.
On Long Island, the industrial real estate vacancy rate hit 2.6 percent in the third quarter, according to data from Cushman & Wakefield. Long Island Business News reports the figure is a record low in the area’s recent history.
Prior to the pandemic, Long Island’s industrial vacancy rate was 4.5 percent. It has since dropped by 1.9 percentage points, or 42 percent.
As less space is available on the industrial market, leasing in the sector has dropped off. Slightly more than 400,000 square feet of industrial space was leased on Long Island last quarter, the lowest in more than four years.
A tighter market for industrial space supply is also pushing up rents. The average asking rent across the Long Island market last quarter was $12.45 per square foot, marking the seventh straight quarter to see an increase in average asking rent.
The first three quarters of 2021 have seen nearly 2.1 million square feet of net absorption in the industrial market, LIBN reports. During the same period in 2020, net absorption was just over 111,000 square feet.
More industrial space is on its way to Long Island too. Cushman projects 2.5 million square feet of new industrial space will be constructed by the end of 2022, according to LIBN, meaning the amount of space could conceivably double by the end of 2024.
In the third quarter, Brookfield Asset Management acquired a 15-acre site in Hicksville for $45 million, where it plans on developing two LEED-certified, Class-A distribution facilities totaling upwards of 300,000 square feet. The facilities are expected to come online within two years.
The fourth quarter is off to a strong start too. Earlier this month, NorthPoint Development agreed to purchase 92 acres from affiliates of the Brookhaven Rail Terminal in Yaphank, hoping to close the deal by year’s end. The Kansas City-based developer plans to build between 650,000 and 1.1 million square feet of industrial space there featuring rail freight access.
[LIBN] — Holden Walter-Warner