Economy: Unemployment Rate Falls Despite Losses in Industrial Sector
Long Island’s unemployment rate closed Q3 2026 at 3.8%, down 10 basis points (bps) from the previous quarter, remaining below the national average of 4.2%. Total nonfarm employment rose 0.3% year-over-year to 1.4 million jobs. Construction employment decreased by 1,400 jobs from one year ago, with declines in 14 of the last 16 months. Overall industrial employment also declined quarter-over-quarter (QOQ) with a loss of 392 jobs across the manufacturing, trade, transportation, and utilities sectors.
Supply and Demand: New Leasing Activity Remains Robust Despite Uptick in New Supply
The industrial vacancy rate increased modestly by 40 bps QOQ to 5.3% yet remained significantly below the national average of 6.8%. Suffolk County accounted for the bulk of the increase, with vacancy rising 50 bps to 5.5% while Nassau County’s vacancy rose by 20 bps to 4.8%. The Western Suffolk submarket recorded the largest increase, up 160 bps to 4.5%, marking the first time since Q3 2024 that it is no longer had the lowest vacancy rate in the market. Net absorption concluded the quarter in negative territory, primarily due to the addition of eight spaces greater than 50,000 square feet (sf), despite a significant uptick in tenant demand.
New leasing activity totaled 1.1 million square feet (msf) in Q3 2026, bringing year-to-date (YTD) deal volume to 4.0 msf, already surpassing 2025’s full-year total. The market has now posted five consecutive quarters with more than 1.0 msf leased for the first time in Long Island’s history. Suffolk county continued to lead the market, accounting for six out of the top 10 deals signed this quarter. Notable transactions included Cencora’s full-building renewal at 5500 New Horizons Boulevard in Amityville and Veritiv’s 107,011-sf new lease at the Old Nichols Commerce Center in Islandia. Additionally, retailer/wholesaler, logistics, and manufacturing tenants accounted for approximately 67% of the total square footage leased YTD.
The overall average asking rent fell by $0.41 per square foot (psf) QOQ to $18.90 psf, with losses observed in both counties. Western Nassau posted the largest decrease, down 7.7% to $21.33 psf, as Class A availabilities continued to lease, putting downward pressure on pricing. Warehouse/distribution rents also edged lower, falling by $0.25 psf to $19.24 psf.
Construction: Construction Pipeline Continues to Expand With One New Project
Market fundamentals remained stable as developers continued to invest in Long Island. The construction pipeline expanded again this quarter with the addition of one new project. Ares Management broke ground on its second speculative development, a 332,920-sf logistics center in Medford, slated to deliver in mid-2027. This brings the total square footage under construction to 2.1 msf across five sites. New projects continue to push into Eastern Suffolk, driven by the availability of commercial land and comparatively lower real estate taxes.
