Economy: Unemployment Rate Falls Despite Losses in Office-Using Sector
Long Island’s unemployment rate closed Q3 2026 at 3.8%, down 10 basis points (bps) from the previous quarter, remaining below the national average of 4.2%. Total nonfarm employment rose 0.3% year-over-year to 1.4 million jobs. Office-using employment—an essential indicator for office market demand—fell by 5,660 jobs quarter-over-quarter (QOQ), driven by losses in the information, financial services, and professional and business services sectors.
Supply & Pricing: Asking Rents Rise as Vacancy Continues to Trend Downward
The overall vacancy rate continued its downward trajectory, dropping by 20 bps QOQ to 11.6%—its lowest point since Q2 2020. Nassau and Suffolk County closed out the quarter at 11.2% and 12.4%, respectively. While vacancy declined across most submarkets, Western Suffolk posted the largest quarterly improvement, decreasing 130 bps to 11.8%. Western Nassau remained the tightest submarket on Long Island, with vacancy declining 80 bps QOQ to 8.9%. Sublease vacancy fell 10 bps QOQ to 1.9%, totaling approximately 670,000 square feet (sf)—its lowest level since Q3 2020. Tenant demand outpaced new supply for the third consecutive quarter, resulting in 419,427 sf of occupancy gains year-to-date and sustaining the market’s positive momentum.
Long Island’s overall asking rent rose by $0.29 per square foot (psf) QOQ to $33.62 psf, with gains observed in both Nassau and Suffolk County. Eastern Nassau registered the largest quarterly increase, up $1.07 psf to $31.65 psf, while Western Nassau maintained its position as the most expensive submarket on Long Island at $40.79 psf. Class A rents rose by $0.14 psf QOQ to $37.74 psf as the flight-to-quality trend continued to exert upward pressure on Class A pricing.
Demand: New Leasing Activity Softens Despite an Uptick in Renewal Volume
New leasing activity remained healthy through the first three quarters of the year, totaling 1.1 million square feet. However, quarterly deal volume fell to 281,640 sf, representing a 39.6% QOQ decrease. Nassau County dominated leasing this quarter, accounting for nine of the top 10 leases signed. The largest transactions included NFP’s 68,910-sf renewal for the entire building at 45 Executive Drive in Plainview, and Ruskin, Moscou Faltischek, P.C.’s 55,668-sf renewal at 1 RXR Plaza in Uniondale. Sales activity remained robust during the quarter, with Long Island Power Authority’s acquisition of 1307 Walt Whitman Road in Melville for $32.5 million, or $167 psf, from Capital One. The transaction reflects a broader trend across Long Island, where Class A and B office properties continue to be purchased by end-users.
