“With an increasing number of industrial tenants from Brooklyn and Queens seeking to relocate to Nassau and Suffolk counties, rents will continue to trend upward through 2016,“ says Reid Berch, EVP with JLL's Long Island industrial team. “The increasingly competitive Long Island industrial market will provide landlords with the leverage to raise rents. We see strategically located, newer, high-quality warehouse space with ceiling heights greater than 24 feet generating the largest pricing gains.”

The average asking rental rate for Long Island industrial space rose 2.6% last year to $10.54-per-square-foot in the fourth quarter of 2015 from $10.27-per-square-foot in the same period in 2014, driven in part by a 4.7% increase in manufacturing space rents. Overall asking rents at the end of 2015 stood at $14.01-a-square-foot in Queens, down from $14.15 in the fourth quarter of 2014. Rents in Suffolk County increased 1.1% during that period to $8.40-a-square-foot, while overall asking rents in Nassau County were relatively flat (down 0.4%) at $10.35-a-square-foot at the end of 2015.

MELVILLE, NY—Industrial rents on Long Island are expected to rise once again this year caused by the combination of adaptive reuse of industrial product on Long Island to residential use as well as a migration of Brooklyn and Queens firms to Long Island industrial properties.

Brokerage firm JLL reports industrial properties in Nassau and Suffolk counties enjoyed approximately 1.3 million square feet of positive absorption in 2015. The borough of Queens posted positive absorption of 391,000 square feet.

The overall Long Island industrial market vacancy rate fell 150 basis points or 40.5% from a year earlier to just 2.2% at the end of 2015. A closer look at the numbers shows just how tight the industrial market actually is on Long Island. In Nassau County, the vacancy rate for warehouse and distribution and manufacturing space stood at 5.8% and 2.8% respectively, with an overall rate at 4.0%. Conditions are much tighter in Suffolk County, with the vacancy rates for warehouse and distribution and manufacturing space at 1.4% and 2.1% respectively at year-end 2015. The overall industrial vacancy rate in Suffolk County stood at 1.8% at the end of last year. The overall vacancy rate as well as the rate for the warehouse and distribution and manufacturing space in Queens all came in at 1.7% in the fourth quarter of 2015.

Another driver that is expected to help push vacancies even lower on Long Island is the lack of available land parcels, JLL adds in its report. In addition, the region is also seeing few industrial properties on the market for sale.

“With an increasing number of industrial tenants from Brooklyn and Queens seeking to relocate to Nassau and Suffolk counties, rents will continue to trend upward through 2016,“ says Reid Berch, EVP with JLL's Long Island industrial team. “The increasingly competitive Long Island industrial market will provide landlords with the leverage to raise rents. We see strategically located, newer, high-quality warehouse space with ceiling heights greater than 24 feet generating the largest pricing gains.”

The average asking rental rate for Long Island industrial space rose 2.6% last year to $10.54-per-square-foot in the fourth quarter of 2015 from $10.27-per-square-foot in the same period in 2014, driven in part by a 4.7% increase in manufacturing space rents. Overall asking rents at the end of 2015 stood at $14.01-a-square-foot in Queens, down from $14.15 in the fourth quarter of 2014. Rents in Suffolk County increased 1.1% during that period to $8.40-a-square-foot, while overall asking rents in Nassau County were relatively flat (down 0.4%) at $10.35-a-square-foot at the end of 2015.