Next major developing hub: William Floyd
As we continue to track changes and trends in the industrial sector on Long Island, two things remain constant: Go East and Go Up. The east offers land availability and height is playing a more significant role than ever in space utilization. It’s always been about cost effectiveness. When land was plentiful and less costly, it was more economical to build out, rather than up. With the shortage of land, the price has escalated such that, to achieve the same cubic feet of space, it is necessary to build or raise the ceiling heights for better economic functionality. This, coupled with better material handling equipment, makes it practical and necessary to accommodate growth and maintain profitability. A prime example of this is the pending sale of the Stimpson Company property in Bayport — a low-ceiling, 200,000-square-foot building set on 22 acres. An old line regional company is buying this property because it has an oversized plot, and while they were planning to raise the ceiling from 15 to 40 feet clear, plans were only recently abated as a result of the current economic environment.
As mentioned, the towns of Islip and Brookhaven have been aggressively seeking industrial growth through their economic incentive packages to attract and maintain industry. Land availability and cost in these areas have remained in line with industrial growth. Farther west in the towns of Babylon and Huntington, land value, for the most part, is reaching the point where higher and better uses are becoming major considerations. Conversions to wholesale, retail and office are not uncommon here.
Long Island has been and remains a great pool of talent, as well as somewhat of an incubator for industry, harboring high-tech and service-oriented companies supported by warehouse operations. Most of the manufacturing in the market has subsided, giving way to growth in these sectors. New developments are targeting small- to mid-size industry in high-tech and warehouse usage. Typical industrial users occupy 25,000 to 40,000 square feet, while demand for larger blocks of space has diminished.
The rental rates on Long Island for warehouse buildings range from $7 to $8 per square foot net, and high-tech usage ranges from $10 to $14 per square foot net, with vacancy rates below 10 percent. It usually takes 3 to 6 months to fill vacancies in these product types.
Industry continues to track east to the William Floyd corridor as the next major developing hub, with great access to transportation and affordable property for development. While the pace has slowed in response to the current world economic climate, the overall market to date remains stable, with demand in check with supply.
— John Pujia is a senior director with Greiner Maltz Company of Long Island, Inc.