Economy: Unemployment Rate Continues To Rise As Industrial Jobs Fall
The unemployment rate for the New York City Outer Boroughs rose by 20 basis points (bps) year-over-year (YOY), reaching 5.7% in Q2 2026. Over the past 12 months, the city gained 53,400 private sector jobs, primarily in the education, health services, and professional and business services sectors. Construction employment also increased by 2,200 jobs from one year ago, marking the first gain this year. However, the manufacturing, trade, transportation, and utilities sectors shed a combined 3,600 positions YOY. Despite these gains and losses, total nonfarm employment remained stable at 2.1 million jobs.
Supply & Demand: Vacancy Edges Higher Due To Softening Tenant Demand
The Outer Boroughs industrial vacancy rate edged higher for the fourth consecutive quarter, rising 40 bps to 7.0%—the highest level in recent history. Queens recorded the largest shift, with vacancy climbing by 80 bps to 6.7% due to several large blocks of space becoming available in the submarket. The Bronx was the only borough to record a quarter-over-quarter (QOQ) decrease, with vacancy falling 30 bps to 8.6%. With new supply outpacing tenant demand, the market posted 634,096 square feet (sf) of negative net absorption year-to-date (YTD).
New leasing activity moderated in Q2 2026 as tenant demand softened after robust activity in the previous quarter. Deal volume totaled 1.2 million square feet YTD, representing a 33.5% drop compared to the first half of 2025. Queens accounted for 63.6% of total transaction volume, with the borough registering three out of the quarter’s top five leases. Key deals included FedEx’s 76,610-sf renewal at 58-95 Maurice Avenue in Maspeth and Skyline Logistics Services’ 34,203-sf renewal at 145-20 17th Street in Jamaica. Traditional warehousing, logistics, and retailer/wholesaler tenants accounted for nearly 60% of the total square footage leased across the boroughs so far this year.
Overall average asking rents fell by $0.24 per square foot (psf) QOQ to $27.50 psf as pricing continued to trend downward from its peak in Q4 2024. Brooklyn and Queens experienced quarterly declines while the Bronx posted the largest increase, up 1.1% to $32.69 psf. Warehouse/distribution rents dropped by a similar margin, down $0.16 psf QOQ to $28.12 psf.
Construction: Construction Pipeline Expands As Developers Remain Confident
The Outer Boroughs’ development pipeline expanded this quarter as Kurv Industrial broke ground on its speculative 444,176-sf two-story industrial complex at 40 19th Street in Sunset Park, Brooklyn. This brings the total volume under construction to 737,027 sf across three sites. Despite market fundamentals exhibiting mixed signals, developers remain confident in the market, moving forward with both speculative and build-to-suit projects among the currently approved developments.
