Tri-State Industrial Leasing Surges 35.6% in H1 2026

Industrial leasing across the New York, New Jersey, and Pennsylvania Tri-State corridor jumped 35.6% year-over-year to 36.5 million square feet in the first half of 2026, according to Cushman & Wakefield’s latest industrial report. The surge drove 16.1 million square feet of positive net absorption and pulled regional vacancy down to 8.5%, marking the corridor’s second-highest H1 leasing total since 2021 and the clearest sign yet that occupiers are working through the region’s pandemic-era supply overhang.

Working Off the Overbuild

The rebound follows several years of pandemic-era overbuilding. Supply stayed ahead of demand across much of the corridor.

Over the past five years, the region added 236.7 million square feet of industrial space. Its total footprint grew 22.3% to more than 1.5 billion square feet.

Construction starts have since cooled sharply. Starts peaked at 48.4 million square feet in 2022. They fell to 31.9 million in 2023 and 22.5 million in 2024.

Starts rose to 29.8 million square feet in 2025. They reached just 14.9 million square feet in the first half of 2026.

The slowdown is finally giving absorption time to catch up. Nearly all eight markets tracked by Cushman & Wakefield posted positive net absorption.

The Details

Pennsylvania’s I-81/I-78 corridor led the region with 11.1 million square feet of new leasing. That already exceeds 80% of its full-year 2025 volume.

The corridor also recorded the highest net absorption at 7.5 million square feet. It accounts for 14.1 million square feet of the 31.1 million square feet under construction across the region.

Central New Jersey recorded 9.9 million square feet of leasing. New space accounted for 81.6% of the activity. Exit 8A also topped 1 million square feet of leasing for a second straight quarter.

Northern New Jersey posted 6.1 million square feet of leasing and about 974,000 square feet of positive absorption. Vacancy remains elevated at 9.3%.

Southern New Jersey vacancy fell 140 basis points from year-end 2025 to 10.4%. The market recorded 3.2 million square feet of new leasing and 2.4 million square feet of positive absorption.

Long Island leasing more than doubled year-over-year to 2.3 million square feet.

The NYC outer boroughs moved in the opposite direction. They posted negative net absorption of 460,853 square feet as new supply outpaced demand. Vacancy reached 6.7%, while asking rents remained the region’s highest at $28.12 per square foot.

Zooming Out

The leasing rebound also appears in broader Tri-State deal activity.

Investors are increasingly willing to underwrite the remaining construction pipeline. The region had 31.1 million square feet under construction across 91 projects at midyear.

That figure rose from 28.2 million square feet a year earlier. However, six of the eight markets still have preleasing rates below 50%.

Speculative risk has therefore not disappeared, even as leasing activity improves.

Why It Matters

About 60 million people live within a five-hour drive of the Port of New York and New Jersey. The port handled 4.4 million TEUs in the first half of 2026, up 0.2% year-over-year.

That scale helps explain why occupiers continue targeting the corridor despite higher costs than inland alternatives.

Refinancing activity also points to improving lender confidence. Recent East Coast industrial portfolio deals show continued support for the sector.

Cushman & Wakefield forecasts average annual rent growth of about 2.5% across select Tri-State markets from year-end 2026 through 2028.

That’s well below the double-digit growth seen earlier in the cycle. Still, it would mark a return to positive rent growth.

What’s Next

The key test will be whether leasing momentum continues as the remaining construction pipeline delivers.

Strong absorption could push some Tri-State submarkets toward sustained rent growth. Others may continue competing for a limited pool of large-block tenants over the next several quarters.