Economy: Overall Employment Rises As Construction And Manufacturing Sectors Add Jobs
Long Island's unemployment rate closed Q2 2026 at 3.9%—up 40 basis points (bps) from the previous quarter, though it remained below the national average of 4.2%. Total nonfarm employment rose 0.4% year-over-year (YOY) to 1.4 million jobs. Construction employment increased by 1,100 jobs from one year ago, marking the first gain after 13 consecutive months of declines. Overall industrial employment fell quarter-over-quarter (QOQ) as losses of 1,048 jobs in the trade, transportation, and utilities sector offset a gain of 533 positions in the manufacturing sector.
Supply And Demand: New Leasing Activity Hits New Milestone As Vacancy Continues To Decline
The industrial vacancy rate continued its downward trajectory, dropping by 30 bps QOQ to 4.9%—sitting below 5.0% for the first time since Q3 2024. The Central Suffolk submarket recorded the largest decrease, with vacancy dropping 60 bps QOQ to 5.2%, while Western Suffolk held the lowest vacancy rate in the market at 2.9%. Year-to-date (YTD) net absorption turned positive following a significant uptick in tenant demand this quarter, resulting in 314,272 square feet (sf) of occupancy gains.
New leasing activity surged to 1.7 million square feet (msf) in Q2 2026, marking the highest quarterly volume ever recorded in Long Island's history and bringing YTD deal volume to 2.9 msf. The market has now posted four consecutive quarters with more than 1.0 msf leased for the first time since 2022. Nearly 75% of all leasing activity was concentrated in Suffolk County, which continued to lead the market. Notable transactions included Home Depot's record-setting 414,000-sf build-to-suit (BTS) lease at the Long Island Rail Terminal in Yaphank and OnTrac's 121,270-sf lease for the entire newly constructed building at 2950 Veterans Memorial Highway in Bohemia. Additionally, retailer/wholesaler, food & beverage, and logistics tenants accounted for approximately 71% of the total square footage leased so far this year.
The overall average asking rent rose by $0.16 per square foot (psf) QOQ to a new market high of $19.31 psf, with gains recorded across both counties. Western Nassau posted the largest increase, up 1.5% to $23.11 psf as new high-quality availabilities put upward pressure on pricing. Warehouse/distribution rents also edged higher, climbing by $0.07 psf to $19.49 psf.
Construction: Construction Pipeline Expands Further East As Developers Remain Confident
Market fundamentals remained robust as developers continued to bet on Long Island. The construction pipeline expanded this quarter as Ares Management broke ground on its speculative four-building, 528,818-sf logistics center in Bellport, slated to deliver in mid-2027. This brings the total square footage under construction to 1.7 msf across four sites. Additionally, Stonemont Financial Group finished its 37,000-sf BTS facility for GlacierPoint at 380 Oser Avenue in Hauppauge, bringing YTD construction completions to 174,470 sf. New projects are pushing further east across Long Island as industrial development sites become increasingly scarce in Nassau County and Western Suffolk.
