Fall 2025: Construction Pipeline Normalizes After Historic Expansion
NEW PROJECTS HIGHLIGHT A SHIFT IN DEVELOPMENT
Long Island’s development pipeline began to normalize after a historic expansion in 2022- 2024. Seven new projects have broken ground so far this year, bringing the total under construction pipeline to 1.4 million square feet (msf). Additionally, several developments are currently conducting site work and are expected to break ground across the market next year. Tenant demand for Class A product has accelerated significantly, with pre-occupancy rates among these ongoing projects at nearly 70.0%.
Year-to-date (YTD) 2025 completions totaled 518,768 square feet (sf) across three buildings, with 36.2% of the space leased upon delivery. More developers are now opting to focus on build-to-suit (BTS) opportunities and smallbay, multi-tenant projects instead of the more traditional speculative, single-tenant lastmile facilities that were popular during the pandemic-era expansion. This shift is giving developers more certainty in occupancy for BTS developments, and investors more diversity and flexibility in tenancy for smallbay buildings as the construction pipeline continues to slow down from its peak a few years ago.
DEMAND PICKS UP IN NEW CONSTRUCTION BUILDINGS
Since 2019, nearly 6.0 msf of new construction has been completed, marking the market’s largest expansion cycle since the late 1980s. Investors and developers have been drawn to Long Island because of its strong demographics, including a solid labor force and a densely populated, affluent consumer base. Rental rate growth has nearly doubled over the same period, and tight vacancy rates have attracted institutional groups from across the country.
The overall vacancy rate of 5.2% has steadily increased from its historic low in 2022, primarily driven by speculative construction over the past few years. Newly built properties account for just 5.5% of total market inventory, with 63 properties completed since 2015. Vacancy levels in these buildings peaked at 46.1% in 2023 during the height of new development and now sit at 30.3% as Class A demand continues to accelerate. Despite elevated vacancy, the slowdown in construction should alleviate new supply pressures and allow more time for these developments to secure tenants.
During the recent expansion cycle, projects occurred across Long Island. With the completion of 65 Rason Road in Inwood, there are no new construction projects currently underway in Nassau County for the first time since 2018 as vacant industrial-zoned land has become exceedingly scarce.
Suffolk County, meanwhile, has remained the center of development, highlighted by Trader Joe’s recent purchase of a 68-acre site at the former Computer Associates headquarters in Islandia. They recently started construction on the 921,300-sf, three-building industrial complex, with a portion dedicated to cold and freezer storage—slated to become the largest single-user industrial building on Long Island.
OUTLOOK
Market fundamentals continue to strengthen as the economy shows signs of improvement. Developers remain optimistic about Long Island’s industrial landscape but are adopting a more strategic approach to new projects. More prospective tenants, including logistics and food & beverage users, are entering the market and focusing on Class A buildings. Existing companies are expanding and consolidating their spaces, finding efficiencies within modern facilities.
By the end of 2027, 2.7 msf is expected to be delivered, with the majority of developments occurring in Central and Eastern Suffolk County. As the construction pipeline softens and projects push further east due to limited land availability, tenants face increasingly constrained options in site selection—a trend expected to persist through 2026.
