Background
Did you know that Long Island starts at New York Harbor and extends east for over 118 miles into the Atlantic Ocean? It holds the title of the most populated island in the USA and is home to some of the world's wealthiest neighborhoods while also containing working-class communities. Four counties make up Long Island, Kings, Queens, Nassau, and Suffolk. The total population is 7.5 million.
Long Island has played a prominent role in scientific research and engineering. It is home to the Brookhaven National Laboratory in nuclear physics and the Department of Energy research. Companies such as Sperry Rand, computer associates, zebra Technologies have made Long Island a center for the computer industry.
Wineries and winemaking have become significant industries on the North Fork of Long Island, home to more than 30 vineyards. Long Island is home to the largest industrial park on the east coast, the Hauppauge Industrial Park, hosting over 1,300 companies that employ more than 71,000 individuals. As many as 20% of Long Islanders commute to jobs in Manhattan. The island's far eastern end is still partly agricultural. The development of vineyards on the North Fork has spurred a significant viticultural industry. Fishing continues to be an essential industry.
Retail Real Estate Market
Retail real estate will take a significant impact over the next 12 months in Long Island. As of 20Q3, the vacancy rate was 5.1%, which is on par with the national average. Over the past ten years, the lowest vacancy rate was 3.85% in 15Q2.
Retail rents should drop by 10% over the next 12 months. As displayed in the graph below, Long Island faired better than the national average in the Financial Crisis of 07-09. In regards to the current COVID 19 crisis, it is expected that rent will drop sharply, but the recovery should be exponential. Predictions have rental rates bottoming out on 21Q2 at -7.3% and then peaking only six quarters later in 22Q3 at 8.5%. Take note the time to sign a lease is in 2021.
Final Thoughts
A point of concern for Long Island should be net employment change year over year and net population change year over year. Before the Financial Crisis, Long Island saw negative population growth until 2008, where expansion lasted until 2015. Since 2015 population change has been negative and is forecasted to continue in the negative. Hundred of thousands of jobs have been lost in the past few months, which will take significant time to rebuild.
Net Population Change
Net Employment Change
Growth in the Long Island economy is reliant on the health of the greater New York economy, yet the metro has some unique strengths.
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