Economy: Unemployment Rate Falls Despite Losses in Industrial Sector
The unemployment rate for the New York City Outer Boroughs fell by 30 basis points (bps) quarter-over-quarter (QOQ) to 5.4% in Q3 2026. Over the past 12 months, the city gained 27,600 private sector jobs, primarily in the education, health services, and professional and business services sectors. Construction employment also increased by 1,500 jobs from one year ago. However, the manufacturing, trade, transportation, and utilities sectors shed a combined 2,100 positions year-over-year (YOY). Despite these gains and losses, total nonfarm employment remained stable at 2.1 million jobs.
Supply & Demand: Leasing Activity Accelerates as Tenant Demand Outpaces New Supply
The Outer Boroughs industrial vacancy rate declined by 30 bps QOQ to 6.8%, snapping a four-quarter streak of increases. Queens recorded the largest shift, with vacancy falling by 50 bps to 6.1% due to several large blocks of space being leased in the submarket. Brooklyn vacancy also decreased to 5.2%, the lowest of any borough in the market. With tenant demand outpacing new supply, the market posted 343,266 square feet (sf) of positive net absorption in Q3 2026 after two quarters of occupancy losses.
New leasing activity totaled 1.0 million square feet (msf) in Q3 2026, surging 137.3% QOQ as tenant demand accelerated following softer activity in the previous quarter. This brought year-to-date deal volume to 2.2 msf. Queens accounted for 63.2% of total transaction volume, with the borough registering four out of the quarter’s five largest leases. Most notably, a confidential e-commerce company leased the entire 245,337-sf Whitestone Logistics Center in College point, representing the largest lease signed this year. Additionally, four leases totaling 350,000 sf signed at the newly constructed Review Avenue Complex in Long Island City as demand accelerated for Class A product. Industrial outdoor storage (IOS) sites also commanded significant demand, with 11 acres of parking leased across the boroughs during the quarter.
Overall average asking rents fell by $0.18 per square foot (psf) QOQ to $27.31 psf as pricing continued to trend downward from its Q4 2024 peak. Brooklyn, Queens, and Staten Island experienced quarterly declines, while the Bronx posted the only increase, up 3.5% to $33.93 psf. Warehouse/distribution rents dropped by a similar margin, down $0.06 psf QOQ to $28.04 psf.
