NEW YORK – SEPTEMBER 3, 2025 – The New York, New Jersey, and Pennsylvania (Tri-State) industrial corridor demonstrated notable resilience in the first half of 2025, navigating market headwinds with stable rental rates and continued confidence in the region’s long-term potential, according to a new report from Cushman & Wakefield. The H1 2025 Tri-State Industrial Report details how the market is adjusting to pre-pandemic demand levels while still showing signs of strength, driven by robust port activity and a dense, affluent consumer base.
The report finds that while the overall vacancy rate for the 1.5 billion-square-foot corridor rose to 8.7%, the market is showing signs of normalization rather than decline. Leasing activity reached 26.9 million square feet in the first half of the year, a pace set to surpass 2023 totals. This activity was largely driven by demand from third-party logistics (3PL) providers, food and beverage companies, and retailers.
“Despite headwinds in the current environment, the Tri-State industrial market remains among the strongest in the nation,” said Dimitri Mastrogiannis, Senior Research Analyst at Cushman & Wakefield. “Our region’s adaptability and ongoing demand for prime logistics locations continue to drive positive long-term momentum, positioning the corridor for sustained performance and future growth.”
A key driver of the region's stability is the sustained performance of the Port of NY/NJ, the busiest port on the East Coast. The port’s volume in H1 2025 was up 4.9% from the previous year, underscoring its critical role as a gateway for goods servicing the 60 million people who reside within a five-hour drive. This consistent activity continues to fuel demand for industrial space across the corridor.
Construction shows new completions slowed to 14.8 million square feet in H1 2025. However, a wave of new speculative and build-to-suit projects has broken ground, particularly in the PA I-81/I-78 corridor.
“Construction trends reflect a market in transition,” added Felix Soto, Research Manager at Cushman & Wakefield. “This activity signals continued developer confidence, though it will test the market's ability to absorb new supply in the coming months.”
Looking ahead, Cushman & Wakefield forecasts steady growth for the region through 2026 and 2027. Despite a short-term rise in vacancy, demand is expected to rebound, supporting occupancy growth. The PA I-81 & I-78 Corridor is projected to lead rent increases, with gains of 3.0% in 2026 and 4.0% in 2027, positioning the entire Tri-State corridor for sustained long-term performance.