Commercial Property / Long Island; Demand Spurs Construction of Spec Office Buildings

After a decade-long pause, Long Island developers are building offices on speculation again — and TRITEC is among them.

Bolstered by falling vacancy and rising rents, developers have started three speculative office buildings across the Island, all additions to parks their owners say are nearly fully leased. Two larger projects expected to break ground by mid-1999 — one from the Tilles Companies, the other from TRITEC Real Estate Company of East Setauket — would add more than 900,000 square feet of new speculative space in Suffolk County alone.

TRITEC’s share is a 395,000-square-foot, two-building complex on a 20-acre site at Exit 54 of the Long Island Expressway in Hauppauge, which the firm is under contract to purchase. The project, to be built in two phases, is being designed by Mojo Stumer Architects of Roslyn with the Baldassano Architectural Group of Hauppauge. Insignia/ESG’s Syosset office is the exclusive broker.

The numbers behind the turn are striking. Cushman & Wakefield of Long Island reported the overall vacancy rate for prime office buildings had fallen to 10 percent at the end of the third quarter, down sharply from 13.4 percent a year earlier, while average rents climbed from $23.47 to $24.80 a square foot.

TRITEC principal Robert J. Coughlan Jr. said construction is still some months off, pending site plan approvals and building permits — and that the firm intends to read the market before committing.

“We have to see what the market is at the time before we decide to go forward without tenants,” Coughlan said. “But I don’t see us slipping into recession.”

Brokers echoed the cautious optimism. “It’s always a gamble to build on speculation,” said Theodore P. Sasso, senior managing director at Insignia/ESG. “But the demand for quality office space is now so strong that it’s not as big a gamble as it was a year ago, and certainly not as big a gamble as two years ago.”

Read the full article in The New York Times.