New York’s Industrial Availability Hits 10-Year High Amid Market Uncertainty

New York’s industrial availability has hit a 10-year high as new construction surges, leasing slows down, and uncertainty builds over fluctuating federal trade policy, according to a recent report from CoStar (CSGP).

By the end of the first quarter of 2025, the industrial availability rate in New York City and the  surrounding area — which includes parts of northern New Jersey and portions of Westchester County — rose for the 11th consecutive quarter to 10.2 percent, CoStar found. That’s an increase from roughly 9.8 percent compared to the fourth quarter of 2024.

Much of that rising vacancy rate can be attributed to a pipeline of new warehouses, distribution centers and other industrial facilities. Since mid-2022, the amount of available industrial space in the New York area surged by 94 percent to 92.2 million square feet, according to CoStar.

A record-breaking 14.9 million square feet of industrial space was completed in New York in 2024 alone, CoStar found. Plus, 4.7 million square feet have already been built during the first quarter of this year.

Meanwhile, the industrial market has also seen a significant decline in leasing — roughly 4.9 million square feet of industrial space was leased during the first quarter of 2025, compared to 2024’s quarterly average of 7 million square feet, according to CoStar.

But likely the most significant factor causing the market’s slowdown are the ever-changing tariffs on global imports under the Trump administration, which are keeping industrial tenants cautious about expanding distribution networks until there’s a clear picture of the tariffs’ effects.

“We’re clearly seeing an impact from this tariff environment,” Victor Rodriguez, senior director of analytics at CoStar, told Commercial Observer. “There’s a lot of uncertainty regarding how aggressive our economic policy trade could be.

“Whether you’re a retailer or whether you’re in logistics, it’s essentially resulted in occupiers saying, ‘We’re going to stay on the sidelines and we’re going to wait and see how this situation unfolds,’” Rodriguez added.

After facing pressure to reconsider his tariffs, President Donald Trump pulled back on some of the trade policies on Wednesday and paused tariffs on most nations for 90 days. However, he jacked up the tax rate on Chinese imports even further to 125 percent, the Associated Press reported.

On the flip side, uncertainty regarding tariffs has given landlords and owners of vacant industrial properties an opportunity to upgrade their facilities to stay competitive in the market, Rodriguez said.

“More so than ever, it’s the higher-quality buildings that will do best,” he said. “I think owners will make a point to highlight how their buildings stand out, whereas the owners of more vintage industrial space may look to spruce up their space.”

As for the national industrial market, vacancy rates reached an average of 7.8 percent nationwide during the first quarter, marking the highest rate in more than a decade, according to a recent report from Savills.

Isabelle Durso can be reached at idurso@commercialobserver.com.