Economy: Labor Market Remains Resilient Despite Slower Job Growth
Brooklyn’s labor market remained stable through Q2 2026, with total nonfarm employment increasing by 100 jobs year-over-year (YOY) to 883,300. National nonfarm employment also posted modest gains, rising 0.2% YOY to 158.9 million jobs. While job growth was limited, Brooklyn’s labor market continued to demonstrate resilience, with the unemployment rate increasing only slightly to 5.8% from 5.5% one year ago. By comparison, the national unemployment rate remained unchanged over the same period, reflecting stronger labor market conditions nationwide.
Supply And Demand: Vacancy Tightens And Leasing Velocity Improves
Brooklyn’s overall vacancy rate fell to 19.9% in Q2 2026, its lowest level in six years and 320 basis points (bps) below the year-ago rate. Downtown Brooklyn recorded a significant decline in vacancy, dropping 330 bps quarter-over-quarter (QOQ), driven largely by the approval of an office-to-residential conversion at 141 Willoughby Street. Northern Brooklyn’s vacancy rate decreased modestly by 20 bps QOQ to 15.1%. Conversely, Coastal Brooklyn recorded a 60-bp increase QOQ to 22.8%, following the addition of 66,200 square feet (sf) of new sublease space.
New leasing activity year-to-date (YTD) totaled 536,226 sf, down 38.0% compared with the same period last year. Despite the slower annual pace, Q2 2026 new leasing activity increased notably to 395,687 sf—a 181.5% uptick QOQ. Downtown Brooklyn accounted for 71.7% of total leasing volume during the quarter, supported by one lease exceeding 100,000 sf and three additional transactions greater than 10,000 sf. Coastal Brooklyn captured 26.1% of activity, while Northern Brooklyn accounted for the remaining 2.2%.
Class A properties accounted for 66.6% of total leased square footage while representing just 33.3% of the total number of transactions. In contrast, Class B and C properties represented only 33.4% of leased square footage but 66.7% of the number of transactions—highlighting ongoing demand for more affordable office space.
Pricing: Pricing Softens While Northern Brooklyn Remains Stable
Brooklyn’s average asking rent decreased by $1.58 QOQ to $51.01 per square foot (psf) in Q2 2026, down 5.7% YOY and extending a year-long downward trend. Coastal Brooklyn’s average asking rent fell to $48.80 psf, while Downtown declined to $55.28 psf, reflecting QOQ decreases of 1.5% and 3.3%, respectively. Northern Brooklyn remained comparatively stable, with asking rents increasing by $0.07 psf to $42.02 psf, 2.5% above year-ago levels.
