Market fundamentals remain under pressure as supply continues to outpace demand. Vacancy stands at 7.5%, while availability has climbed to 9.2%, reflecting recent deliveries and a growing amount of sublease space. Annual absorption totaled 645,000 SF, modest relative to the amount of new space added, and leasing activity remained below historical norms despite some improvement later in the year.

 

Demand continues to favor modern logistics buildings, though that segment has also seen the sharpest rise in availability. Smaller bay properties are holding up better due to tighter supply and faster lease-up. Asking rents average $22.64/SF, and annual rent growth has slipped to -0.9% as landlords offer more concessions in a more tenant-friendly market. Overall, conditions have shifted in tenants’ favor, and fundamentals are likely to remain soft until excess space is absorbed.

 

Key Findings

• The New York industrial market remains in a supply-driven correction, with elevated availability continuing to outpace tenant demand.
• Leasing activity has softened amid economic uncertainty, while tenant leverage has increased across most submarkets and asset types.
• Construction activity is tapering, but the existing supply wave will keep vacancy elevated and rent growth under pressure in the near term.

 

New York Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

New York Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.8%
• Households: 4,842,163
• Current Population: 12,361,971
• Median Household Income: $91,998

 

New York’s economy continues to support industrial demand through its large population, dense consumer base, and global connectivity. Finance, tech, healthcare, and professional services continue to drive jobs and spending across the region. The Port of New York and New Jersey, along with JFK and Newark, remains a major advantage for distribution and logistics users. These strengths help support long-term warehouse demand, especially for infill and last-mile space. Still, tariff uncertainty and slower retail spending growth are making occupiers more cautious in the near term.

 

Top New York Tenants

Source: CoStar Group, Inc.

• TWTH Express
• 4DS Logistics
• Western Carriers
• J. Supor & Son

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

New York Industrial Construction

The development pipeline is contracting after a multi-year surge in new supply. Approximately 3.1 million SF remains under construction, down significantly from prior peak levels, while deliveries totaled 170,000 SF in the latest quarter. Development has been concentrated in large-scale logistics facilities, contributing to rising vacancy in that segment. New construction starts have also slowed considerably due to higher financing costs and softer leasing conditions. Much of the remaining pipeline is in Northern New Jersey, where land availability and infrastructure continue to support large-format development. Despite the slowdown in starts, recently delivered properties are leasing more slowly than in prior years, which should keep availability elevated near term.

 

SF Construction Starts

Source: CoStar Group, Inc.

SF Under Construction

Source: CoStar Group, Inc.

 

New York Industrial Sales

Investment activity has slowed as buyers respond to weaker fundamentals and higher borrowing costs. Sales volume totaled $579 million, with pricing at $305/SF and average cap rates at 6.1%. Investors remain selective, with the strongest interest focused on modern, well-located assets. Fully leased properties continue to attract capital, though some buyers are also pursuing vacant new product with strong long-term leasing potential. Overall sentiment remains cautious, but deal activity could improve once pricing expectations reset and market conditions stabilize.

 

New York Industrial Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Q1 2026 | Source: CoStar Group, Inc.

• Sales Volume: $579M
• Price Per SF: $305
• Cap Rate: 6.1%
• Vacancy Rate: 7.5%
• Rent Growth: (0.9)%
• Asking Rent Per SF: $22.64
• SF Under Construction: 3.1M
• SF Delivered: 170K
• SF Absorbed: 645K