Forgotten for many years industrial property is suddenly a star



The industrial property market has long been a lost child on Long Island. However, the industrial market has become a family favorite these days.

“The industrial market on Long Island was really ignored as commercial developers moved from offices to apartment buildings,” said David Pennetta, executive managing director of Cushman & Wakefield’s Long Island office. But these days, industrial growth driven by business out-of-town is particularly strong in Northwest Nassau, said John Magnani, chief executive of DGNY Commercial and board member of the Long Island Society of Commercial Industrial Brokers.

Pennetta explains that the exodus was driven in part by the numerous industrial sites in Brooklyn and Queens that were sold to real estate developers.

“They are looking for intimacy and access,” says Magnani. But with inventory shortages that have driven prices soaring, developers have to look diligently for locations, although Magnani says the southern counties of Nassau and Suffolk have greater availability at lower prices.

“You just can’t get enough industry listings right now due to extremely low inventory levels,” adds Rich Cruise, agent for Douglas Elliman and president of the Long Island Board of Realtors.

Pennetta says this situation was looming for a long time. “Owning industrial facilities was ugly – not a single speculative industrial building had been built in fifteen years,” he explains, “and the vacancy rate was less than 1 percent.”

With sudden interest and rising prices, including doubling or tripling in recent years, “the market is the strongest in three decades,” says Pennetta.

“There are 6.6 million square feet planned or under construction, as well as one large project that will add nearly 10 million square feet,” says the Cushman & Wakefield chief. “This would represent a 10 percent jump in the total in Nassau and Suffolk.”

Industrial developers from Long Island took the lead in construction. “Everyone here was late for the game,” says Pennetta, but now things are changing: a lot of new developers are coming, as well as people with money. He explains that banks and foundations that have invested in apartment buildings “are now making a big breakthrough in the industrial sector.”

“There’s a lot of money now,” says Pennetta.

While the industrial market remained hot even during the pandemic, the isolation has put other real estate sectors on hold. “The permitting process was slower, there were skeletal teams in the construction departments, and then prices jumped,” Magnani says. It is taking a wait-and-see approach, he said, as employers and employees try to figure out the future of office space, creating oversaturation.

But Cruz says the situation is now improving and should soon accelerate. “We have a lot of commercial and office space advertisements,” he says. “People don’t jump from scratch, but they watch and talk here, and this is the starting point.” He adds that the focus on downtown redevelopment across Long Island has made retail hot.

In the aftermath of the pandemic, Cruise expects some city businesses to either relocate to Long Island or create additional offices for employees who don’t want to return to work. Some of the office plots could eventually be converted to residential areas, Magnani said, adding that while construction departments don’t like the change, the need for tax dollars would be an incentive.

Pennetta says office life will eventually return. “Look how quickly we get back to our old habits,” he says, citing projects at 263 Old Country Road and 515 Broad Hollow Road as examples of how to make offices attractive. The latter offers a huge gym, golf equipment, pool and restaurant. This was intended to be a WeWork space, but now several tenants will use it as their headquarters.

“Long Island kids have a brain drain for a long time,” says Pennetta. This is partly due to housing problems, he explains, but it also has to do with work experience. “This new, more fun type of office work can make a difference and help maintain the tax base.

“This is an exciting time,” he adds. “I am enthusiastic.”


Source link