Commercial real estate vacancy rates on Long Island ended 2017 below the historical average for the region and little has changed so far this year, according to local realtors and data providers.
Nassau/Suffolk industrial vacancies are still at 3.1 percent, office vacancies remain at 7.1 percent and retail vacancies have dropped from 4.4 percent to 4.3 percent, according to CoStar, a commercial real estate information provider. The most noticeable shift is in the retail sector, where brick-and-mortar stores are adapting to the rise in online shopping.
“Retailers are closing their stores and doing much more business online,” says Ron Koenigsberg, a broker and president of Garden City-based commercial real estate company American Investment Properties. “They are increasingly purchasing and renting warehouse space to use as distribution centers.”
Office space vacancy is “down significantly from the 19 percent it once was not that long ago,” says Mario Asaro, a broker and president of Melville-based commercial real estate company Investment One. On the other hand, retail vacancy rates “seem to be climbing due to e-commerce,” he says.
“The malls will have to become entertainment and recreational-minded to attract shoppers,” Asaro predicts.
Jeffrey Pliskin, CEO at Garden City-based Pliskin Realty And Development, notes that while he’s been busier, clients have been signing leases for smaller spaces.
“They realize they don’t need as much,” Pliskin says.
As for the industrial and office markets, Koenigsberg says he’s “expecting to see an increase in rental rates and a decrease in vacancy rates for both sectors.”
Total commercial sales inventory seems to have increased within the past year, he adds.
“Many of our clients were waiting to see how the political environment and tax reform would affect their investment properties,” he says. “Now that some of those questions have been answered, clients are making better informed decisions on whether they will like to sell their properties.”
The “changing landscape” he’s seeing is “primarily because of the transition in the retail market,” he says. One strong positive is that there are “many new businesses buying properties” on LI, he says.
Although Toys “R” Us is closing all its stores and Sears continues to close stores, other large players are expanding, he notes, pointing to Amazon-owned Whole Foods announcing that it’s moving forward with plans to open two more stores, in Garden City and Commack.