New York Industrial Market Report

Slower second-half build-outs ease vacancy pressure amid soft leasing. New York City’s industrial vacancy rose to a two-decade high in the first quarter of 2025, driven by muted demand for large-format space and a record supply surge over the past six months ended in March. Nearly 4 million square feet delivered in that span, yet only 1.4 million square feet remains under construction — one-third of which is in Staten Island, where a 3.3 percent vacancy rate suggests new supply will be well received. The sharp pullback in development should ease pressure in the Bronx, South Brooklyn and Northwest Queens, where vacancy hovers near 10 percent. After the metro posted the nation’s fastest job growth rate last year, demand from tenants serving the local population should hold firm. Tariff-related uncertainty also spurred a wave of leasing near the South Brooklyn Marine Terminal, which could continue if trade volatility with Asia persists, particularly as Red Hook’s upgraded port capacity — expected by 2027 — enhances flexibility for logistics operators.