Central Suffolk Retail Submarket Update – Mid-2024
As we progress into the second half of 2024, the Central Suffolk retail submarket demonstrates a resilient and dynamic landscape, with key indicators reflecting healthy market conditions. The retail space availability rate has consistently stayed below the 10-year average of 7.4%, hovering around 6% since late 2022. This stability is attributed to strong demand, with tenants quickly absorbing new space. Notably, the mall and general retail categories have the highest occupancy rates, with availability rates under 5%. In contrast, strip centers exhibit the most available space, exceeding 9% of their inventory.
The previous year marked a record for project deliveries in Central Suffolk, with 317,000 square feet of new retail space brought to market in 2023. This surge set a high benchmark, as it was the most active period for deliveries recorded in CoStar data dating back to 2006. While 2024 is expected to see a slowdown in new deliveries to 206,000 square feet, this figure still surpasses historical averages, underscoring a strong construction pipeline.
Since October 2023, the submarket has witnessed a net absorption of 110,000 square feet, driven by several significant lease signings. Notable tenants include Northwell Health, which leased 40,000 square feet at The Shoppes at the Boulevard in Yaphank—a luxury community and mixed-use development anchored by a super Walmart. Another major transaction involved Ollie’s Bargain Outlet, which occupied a 33,000-square-foot space at the Selden Plaza Shopping Center, securing a 10-year lease term at $18 per square foot. This rate is notably below the prevailing market asking rents in Central Suffolk, which average around $29.00 per square foot—the lowest across Long Island compared to the broader metro area’s $35.00 per square foot.
The region has experienced a downward trend in annual rent growth, from an all-time high of 5.5% in Q2 2022 to approximately 0.6% as of Q3 2024. However, forecasts suggest a gradual recovery, with rental performance expected to improve slightly, potentially reaching around 1% growth by year-end.
Central Suffolk stands as Long Island’s largest retail submarket, boasting an inventory of 27.2 million square feet. The average retail footprint in the area is approximately 11,000 square feet, which is about 15% larger than the broader metro’s typical retail unit size. Major concentrations of retail properties are found in key areas such as Patchogue, Lake Grove, Medford, and Centereach, primarily along major thoroughfares like routes 25 and 27. The current construction pipeline includes 160,000 square feet of retail space under development, with over half expected to come online at Holmesview Commons in Farmingville during the summer of 2024.
Key Indicators:
- Vacancy Rate: 4.6%, reflecting a stable and healthy market with strong occupancy levels.
- Market Asking Rent: $29.18 per square foot, the most affordable rate on Long Island.
- Net Absorption: 58,222 square feet, indicating positive tenant movement and demand.
- Deliveries: 57,600 square feet, marking continued development activity.
- Under Construction: 157,500 square feet, highlighting a robust pipeline of new retail spaces.
The Central Suffolk retail market continues to be a vibrant and competitive area, with steady demand and a promising outlook for the remainder of 2024. The submarket’s blend of affordable rents, strategic location, and strong tenant demand positions it as a key player in Long Island’s retail landscape.
