Obstacles to growth and changing economic conditions were highlighted in a recent panel event hosted by the Commercial and Industrial Brokers Society of Long Island earlier this month.
The CIBS-LI‘s 2025 State of the Market event held Tuesday, June 17 at 58 South Service Road in Melville, featured a panel of experts from a variety of commercial real estate sectors including retail, industrial, office, banking and construction, exploring current challenges, emerging trends and what may lie ahead.
Moderated by David Pennetta, chief strategic officer for CIBS-LI and executive managing director at Cushman & Wakefield Long Island, the panel included Steve Gillman, a partner at The Shopping Center Group; Devin Kulka, CEO of the Kulka Group; Patti Kielawa, vice president at Hanover Bank; Ray Ruiz, managing director of JLL; and Tom DeLuca, managing director of Cushman & Wakefield.
Kulka said the Long Island construction industry is juggling the current climate of uncertainty, especially with tariffs pushing material prices up 20 to 25 percent.
“You need to maneuver through the territory, and you’ve got to work with it,” he said. “We’re looking to get things domestically. People are going to find a way to get things done.”
Kielawa discussed project financing, which still hinges on whether it’s a good credit decision.
“It’s still going to come down to cash flow,” she said. “Interest rates won’t stop someone from purchasing or seeking financing.”
Kielawa added that $900 billion in real estate mortgages will be coming due in the next two years, which puts pressure on property owners.
“It’s a very fine line of what’s a lendable amount,” she said, “A lot depends on the entire package. We realize that expenses are going up and rents are going up.”
Ruiz said the return of employees to the office is a key component of the health of the office real estate market. He added that 3.74 days per week is the latest average days of staff working in the office and that four days would be optimal.
“We all know how difficult it is to get office deals done,” Ruiz said, though the sector has been improving, with 2.2 million square feet leased last year. He noted that office tenants continue to seek better properties, with Class A buildings seeing single-digit vacancy rates.
“Class A space, that’s the darling of the market,” Ruiz said. “Class B space is more plentiful.”
On the retail side, Gillman said the industry continues to evolve, with entertainment uses filling in vacated big boxes. He said, like the office market, Class A spaces are doing well and praised some of the Island’s progressive villages for making their downtowns attractive to restaurants and other retailers.
“It’s a flight to quality,” Gillman said. “People still like to go shopping.”
Despite a glut of new space, DeLuca said the industrial market remains active.
“There’s been 4 million square feet of new product since 2021 and about 65 percent has been absorbed to date,” he said. “There will be 500,000 to 600,000 square feet of new product this year and we’re seeing strong demand.”
DeLuca mentioned the new Trader Joe’s distribution project in Islandia, first reported by LIBN, as an example of that demand.
“Long Island is an area they want to be in to develop a fulfillment center, and they have expansion plans to open more supermarkets here,” he said. “We are seeing more and more new entries into the Long Island market. It is cost prohibitive for companies to not be here.”
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