(To read more on the industrial market, click here.)

MELVILLE, NY-Rechler Equity Partners has signed more than 300,000 sf of deals in the industrial/flex market here. The deals bring total occupancy to 97.4%.

“We anticipate a continuation of this trend for the remainder of the year and a further tightening of the market, especially for top quality industrial and flex space,” says Mitchell Rechler. The largest transaction was a 128,517-sf new lease by Elm Freight at 2002 Orville Drive in Bohemia. Marchon inked a 25,000-sf renewal at 265 Spagnoli Rd. here.Other large-scale transactions included Schoolwide Inc.’s 21,600-sf renewal at 65 Orville Dr.; Joint Apprentice’s 21,554-sf extension at 85 Engineers Rd. in Hauppauge; Interpharm’s 20,000-sf new lease at 85 Adams Ave. in Hauppauge; and a 15,000-sf new commitment by Rogan Loomstate at 180 Orville Dr. Rechler says the deals “ran the gamut from large, multi-faceted” to renewals and expansions by existing tenants “looking to take advantage of Long Island’s strong business environment.”

Rental rates are finally showing some life, according to Grubb & Ellis. The average asking rental rate for warehouse/distribution space has bumped up 5.6% over the past year, ending the first quarter at $4.56 per sf per year NNN. The firm suggests that the market is approaching its equilibrium vacancy rate, perhaps somewhere between 7.5 and 8%. A number of factors are in place to encourage even more construction: increasing rental rates, plenty of capital for development and investment, rising global trade, outsourcing of manufacturing activity, and ongoing streamlining of corporate supply chains. The firm expects rental rates will continue to rise at a slow to moderate pace in many markets.

Due to the increase of goods being traded with China, US industrial warehousing space and logistical operations are growing by leaps and bounds, with 68.9 million sf of development expansion occurring in 2005, according to a joint study just released by the Staubach Co. and DTZ Debenham Tie Leung. And according to PricewaterhouseCoopers first quarter 2006 Korpacz Real Estate Investor Survey, rental rates have “popped” shifting control to owners. On the warehouse front, the firm says falling vacancy rates, together with a perceived opportunity for rising rental rates, are drawing interest in new development activity throughout the national warehouse market. Long Island was among the lowest vacancy rates at 4.8%.

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