In Brief:
- Industrial demand remains strong from pharmaceutical and home goods sectors.
- Cold storage construction grows as e-commerce and food logistics expand.
- Transit-oriented housing, casinos, and infrastructure projects expected to rise.
- Financing challenges, high construction costs, and approvals may slow development.
With 2025 soon in the rearview mirror, Long Island’s real estate and construction leaders are looking ahead to next year, and what trends will dominate the commercial landscape.
Certain industrial sectors have shown promising activity that will likely carry over into 2026. “The pharmaceutical industry here on Long Island continues to grow and absorb industrial inventory,” says Mario Asaro, president of Industry One Realty in Melville. “Other tenants buying industrial properties are home goods and improvement distribution companies.”
However, new industrial inventory coming online may prevent vacancies from falling significantly. “There are a few projects in Melville and Bethpage that should get absorbed quickly because of their location,” Asaro says, “but what concerns me is additional large industrial buildings being built on speculation for lease only over the next 12-18 months.”
In order to fill these vacancies, Asaro is focused on finding companies that make a good fit for these spaces, along with some creative approaches to leasing. “I am having some discussions with key players to offer some interesting strategies to target some specialized tenants that might ensure these buildings are not sitting vacant in the coming years.”
Construction firms project the hot market for cold storage to continue after a booming 2025. “Across Long Island and the broader New York region, demand for cold storage is being driven by e-commerce, food logistics, and pharmaceutical distribution, and those needs remain steady,” says Michael Adler, director of business development for Aurora Contractors in Ronkonkoma. “With limited high-quality cold storage inventory in the market, we see a consistent pipeline ahead rather than a short-term cycle.”
The aging stock of existing cold storage facilities necessitate further development to meet the demand for space that is custom-tailored for activities such as e-commerce and grocery delivery, each of which have seen significant growth on Long Island. “The market still lacks sufficient modern, purpose-built facilities—many existing cold storage buildings are 20-plus years old and no longer meet the operational needs of today’s users,” says Dale Koch, principal at Bohler in Melville.
There is already momentum in the sector, and firms have reason to believe more development activity is on the horizon. “The Trader Joe’s and Venture Park projects are exciting examples of the kinds of construction projects that the need for modern cold storage facilities has created,” says Stephen Hayduk, principal and chief engineer of Hayduk Engineering in Ronkonkoma, referring to projects currently under way in Islandia and Hauppauge. “Modernization of this type of infrastructure is good for the environment, and good for business.”
Some firms foresee more activity in residential construction. “Many Long Island communities are prioritizing transit-oriented developments, condominiums, and market-rate apartments to expand housing options and support smart-growth planning around their downtowns,” Adler says.
Increased casino and hospitality sector development on Long Island could also lead to more construction activity. “We’re closely watching the momentum around casino and gaming proposals,” says Adler. “These large-scale entertainment and hospitality projects carry significant potential for the region, and our experience within the gaming market sector and other highly technical developments positions us well to support them as they advance in the coming year.”
In addition to housing, civil engineering and infrastructure projects are expected to keep firms busy, including Suffolk County’s sewer expansion, to which Hayduk Engineering has contributed design support. “Here on Long Island, we will also be handling site and civil design for the Mastic Beach Revitalization and other housing projects,” Hayduk says.
Recent zoning initiatives mean more makeovers are on the way for Long Island’s retail landscape, driving the ‘de-malling’ trend into the new year. “We expect big box conversions to remain active, driven largely by ongoing efforts to reposition aging shopping centers across Long Island,” Koch says. “Commercial redevelopment zones—especially flexible floating zones like Brookhaven’s CRD—continue to incentivize this type of investment.”
The growth of the region’s healthcare industry may also spur local development, and Koch believes Bohler is primed for meeting the coming demand. “Healthcare is another area where we’re seeing a clear uptick heading into 2026,” he says. “As major healthcare systems continue to merge, grow, and rethink their real estate strategies, our in-house survey team is helping them fully understand their existing assets and evaluate opportunities for repurposing.”
Among the perennial obstacles that are believed to be impeding all types of development activity on Long Island, financing woes may tie up capital that could otherwise drive growth in the industrial real estate sector. “One major challenge is the wave of commercial mortgage-backed securities loan maturities hitting the market in 2026, which will put a lot of pressure on the industrial and flex building owners who can’t refinance at today’s higher rates,” explains Asaro. “Another continued concern is the high cost of construction… even with the scarcity of developable land, construction costs drive up the price of good potential development projects.”
A complex and convoluted approval process for construction projects could continue to cause a slowdown in activity. “One of the ongoing challenges on Long Island is navigating the municipal approvals process, whether entitlements, site plan approvals, or zoning updates that help modernize long-standing requirements,” notes Adler. “These efforts require early coordination and close engagement with local agencies, and the timeline can be a real hurdle for developers, particularly in mixed-use and residential projects.”
Even with surging demand, finding talent to support large-scale projects remains difficult. “Recruitment of experienced project managers in the current environment has been a challenge,” admits Hayduk.
Despite the potential bumps in the road, industry leaders like Adler remain optimistic in their outlook. “When owners, design teams, and public officials collaborate early and often, we’ve seen that good projects can move forward in a way that benefits both the community and the long-term development goals of the region.”
JARED SCOT, LIBN CONTRIBUTING WRITER
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