Economy: Unemployment Rate Rises Despite Gains In Office-Using Sector
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.
Office-using employment—an essential indicator for office market demand—expanded by 750 jobs quarter-over-quarter (QOQ), driven by gains in the information and professional and business services sectors, despite modest losses in the financial activities sector.
Supply & Pricing: Vacancy Continues To Decline As Net Absorption Stays Positive
The overall vacancy rate continued its downward trajectory, dropping by 90 bps YOY to 11.8%—sitting below 12.0% for the first time since Q2 2020.
Nassau and Suffolk County closed out the quarter at 11.0% and 13.2%, respectively.
While vacancy declined across the market, Western Nassau posted the largest quarterly improvement, decreasing 180 bps to 9.7% and ending the quarter with the lowest vacancy rate among all submarkets.
Sublease vacancy remained stable at 2.0%, totaling approximately 700,000 square feet (sf)—its lowest level since the onset of the pandemic in 2020.
Tenant demand outpaced new supply for the second consecutive quarter, resulting in 359,529 sf of occupancy gains year-to-date (YTD) and continuing the market’s positive momentum.
Long Island’s overall asking rent fell by $0.14 per square foot (psf) QOQ to $33.35 psf, despite modest gains observed in Nassau County.
Western Nassau registered the largest quarterly increase, up $1.68 psf to $40.21 psf—surpassing $40.00 psf for the first time in the submarket’s history.
Eastern Nassau posted the steepest decline, down $0.40 psf QOQ to $30.64 psf.
Class A rents rose by $0.40 psf QOQ to $37.61 psf as more high-quality spaces entered the market, exerting upward pressure on Class A pricing.
Demand: Leasing Activity And Sales Volume Gains Traction Across The Market
New leasing activity remained healthy throughout the first half of the year.
Deal volume totaled 822,935 sf YTD, reflecting a slight 2.9% increase YOY.
Leasing activity was split evenly across the market, with Nassau and Suffolk County accounting for 49.8% and 50.2% of total volume, respectively.
The largest transactions included Microchip Technology’s 73,5000-sf new lease at 878 Veterans Memorial Highway in Hauppauge, and Grassi & Company’s 40,620-sf renewal and expansion at 50 Jericho Quadrangle in Jericho.
Sales activity also accelerated during the quarter, with NYU Langone’s acquisition of 1 & 2 Huntington Quadrangle in Melville for $135.5 million, or $177 psf.
The health system plans to demolish the two office buildings, totaling 763,877 sf, and build a state-of-the-art hospital on the site.
The transaction reflects a broader trend across Long Island, where Class B and C office properties continue to be converted into mixed-use, multifamily, medical, and industrial buildings.
