Long Island Commercial Office Space for Rent

Q4 2025

Long Island Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Long Island commercial real estate (CRE) market in late 2025 is defined by a distinct divergence in sector performance. The Office market is showing surprising resilience, with vacancy rates declining to their lowest levels since 2020 as availability tightens [1, 2]. Industrial fundamentals have softened slightly, with vacancy rising to a 15-year high due to new deliveries, though leasing activity rebounded significantly in the third quarter [1, 4]. Retail remains the region's tightest sector, with vacancy hovering at historic lows and rents pushing upward due to a lack of new construction [5]. Multifamily continues to outperform, ranking as one of the top markets nationally for rent growth, driven by high barriers to homeownership [7].

TenantBase Proprietary Data [10] highlights the distribution of active tenant demand over the last 90 days (197 total deals):

  • Retail/Storefront dominated market activity with 58.38% of all searches [10].
  • Warehouse was the second most active sector at 36.55% [10].
  • Office accounted for 5.58% of total search volume [10].

Office Market

Market Overview Long Island's office market is stabilizing, with vacancy rates trending downward and availability tightening, contrary to the broader national narrative of distress [1].

  • Vacancy & Availability: The overall vacancy rate declined to 10.9% - 13.0%, marking a significant improvement from previous highs [1, 2]. Availability dropped to 12.1%, the lowest level since Q4 2020 [1].
  • Net Absorption: The market recorded robust positive net absorption of 464,000 SF year-to-date, signaling sustained tenant demand [2].
  • Rental Rates: Asking rents have adjusted downward to $30.96 - $32.58 per SF, a strategic reset that has helped fuel leasing activity [1, 2].
  • Market Drivers: Leasing activity totaled 543,000 SF in Q3, a 48% increase quarter-over-quarter, driven by tenants committing to long-term deals as hybrid work models stabilize [1, 2].

TenantBase Activity [10]

  • Demand Share: Office accounted for 5.58% of total search volume [10].
  • Lease Term Preference: Demand is concentrated in short-to-mid-term options [10]:
    • 2-3 Years: 55.56% of deals [10].
    • Less than one year: 22.22% of deals [10].
  • Size Requirements: Tenants seeking 2-3 Year terms have an average lower size requirement of 275 SF, reflecting a market dominated by small, local professional users [10].

Industrial & Warehouse Market

Market Overview The Long Island industrial market is navigating a supply-driven "recalibration," with vacancy rising to its highest level since 2010 despite a recent uptick in leasing velocity [1].

  • Vacancy & Rent: Vacancy rose to 6.1% - 6.9% as new construction outpaced absorption [1, 4]. Consequently, average asking rents softened to $16.35 - $18.53 per SF, a slight year-over-year decline [1, 3].
  • Demand & Supply: Net absorption turned positive in Q3 (+165,000 SF), breaking a streak of negative growth, though year-to-date absorption remains mixed [3, 4].
  • Construction: The development pipeline stands at approximately 690,000 - 853,000 SF, with pre-leasing rates around 27%, suggesting supply pressure will persist in the near term [3, 4].
  • Leasing Highlights: Leasing activity surged to 1.1 million SF in Q3, the strongest quarter since 2022, driven by logistics and manufacturing tenants [4].

TenantBase Activity [10]

  • Demand Share: Warehouse accounted for 36.55% of total search volume [10].
  • Lease Term Preference: Demand is fairly balanced across terms [10]:
    • 3-5 Years: 31.43% of deals [10].
    • 1-2 Years: 22.86% of deals [10].
    • 2-3 Years: 20.00% of deals [10].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 3,125 SF, while longer-term tenants (5+ Years) are seeking slightly smaller spaces averaging 2,875 SF [10].

Retail Market

Market Overview Long Island's retail sector is exceptionally strong, characterized by "tight supply" and "rising rents" as vacancy holds at historic lows [5].

  • Vacancy & Availability: The retail vacancy rate sits between 4% and 5%, with availability virtually nonexistent in prime corridors [5].
  • Rental Rates: Asking rents range from $29.59 to $41.00 per SF, with mid-sized spaces in Nassau County seeing double-digit year-over-year growth [5].
  • Construction: New ground-up construction is minimal, forcing retailers to compete for existing second-generation space or fund expensive build-outs [5].
  • Demand Drivers: Experiential concepts, service providers, and grocery expansion are the primary engines of demand [5].

TenantBase Activity [10]

  • Demand Share: Retail/Storefront activity dominated with 58.38% of all search volume [10].
  • Lease Term Preference: Retail tenants show a strong preference for long-term stability [10]:
    • 5+ Years: 34.69% of deals [10].
    • 3-5 Years: 30.61% of deals [10].
    • 1-2 Years: 20.41% of deals [10].
  • Top Locations: Tenant interest is highest in West Babylon (6 deals), Central Nassau County (5 deals), and Bethpage (4 deals) [10].

Multifamily Market

Market Overview The Long Island multifamily market is a top performer nationally, benefiting from high barriers to homeownership and a skilled workforce [7].

  • Rents: Long Island ranked as the second-highest market for rent growth in the U.S. in Q3 2025, with effective rents reaching $2,912 per unit, a 3.3% year-over-year increase [7].
  • Vacancy: Vacancy remains tight, supported by consistent demand that outstrips limited new supply [6].
  • Drivers: The region's high per capita income and proximity to New York City continue to support strong fundamentals, even as affordability challenges persist for renters [7].

2026 Outlook

Looking ahead to 2026, the Long Island market is positioned for "steady as she goes" stability rather than explosive growth [8].

  • Retail Constraints: With no significant construction pipeline, retail availability will remain scarce, keeping the advantage firmly with landlords and driving rent growth [5].
  • Industrial Stabilization: The industrial vacancy rate is expected to peak in early 2026 before stabilizing, as the current construction pipeline delivers and demand catches up [3, 4].
  • Housing Dynamics: The residential market is expected to see moderate price growth of 2% - 4%, with high mortgage rates keeping many would-be buyers in the rental pool, further supporting multifamily demand [8].

Sources

  1. Newmark: Long Island Office & Industrial Market Overview Q3 2025
  2. CBRE: Long Island Office Figures Q3 2025
  3. CBRE: Long Island Industrial Figures Q3 2025
  4. Cushman & Wakefield: Long Island Industrial MarketBeat Q3 2025
  5. Dolfin Partners: Long Island Retail in 2025
  6. Matthews: New York, NY Multifamily Market Report Q3 2025
  7. Arbor Realty Trust: Top U.S. Multifamily Rent Growth Markets Q3 2025
  8. Matt Klages: 2026 Housing Market Predictions Long Island
  9. Cushman & Wakefield: Long Island Office MarketBeat Q3 2025
  10. TenantBase Proprietary Market Data (Long Island - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.