August 30, 2025
The industrial real estate market on Long Island is feeling the weight of uncertainty, and tariffs are at the center of it all. As businesses navigate the unpredictable trade policies coming from Washington, many are hitting pause on their real estate decisions — whether it’s buying, leasing, or building new space.
From a broker’s standpoint, this "wait-and-see" attitude has slowed down activity noticeably. In Q2, Long Island saw only 440,930 square feet of industrial space leased — a 16% drop from the previous quarter and the slowest pace in two years.
Companies are hesitant to commit to long-term leases or purchases when they can’t predict how tariffs will impact their supply chains and operating costs.
However, the story isn’t black and white. While some brokers report a clear dip in leasing activity, others argue the demand for quality industrial space is still alive and well.
Spaces that offer high clear heights, modern loading docks, and flexible layouts are still seeing interest, especially among large corporate users. But speculative new construction has nearly frozen, with over 2.3 million square feet of vacant space needing to be absorbed first.
One trend that’s emerging is a shift in focus. Companies are gravitating toward last-mile facilities and smaller flex spaces that allow them to stay agile in uncertain times. This hedging strategy helps them avoid being locked into oversized commitments while tariffs loom overhead.
Looking ahead, there’s a silver lining. Some believe that these tariff-induced challenges could eventually lead to a resurgence of light manufacturing on Long Island. Areas like Yaphank, Ronkonkoma, and Calverton could benefit as companies seek to bring production closer to home to mitigate supply chain disruptions.
Still, the reality on the ground is that many business owners are in a holding pattern. Until there’s clarity on trade policies, we’ll continue to see cautious movement in Long Island’s industrial sector.
For those of us in commercial real estate, it means being patient, staying informed, and guiding clients through these choppy waters with strategies that prioritize flexibility and risk management.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
