Demand falters amid rapidly escalating prices; industrial tenants eye greater affordability. Fueled by consistent demand for housing, retail and office space in the outer boroughs, industrial demand is evolving in New York City. As rental rates on existing properties along the East River in Brooklyn and Queens are priced to reflect their redevelopment potential, existing industrial tenants have been prompted to relocate to more affordable locations further from the metro core. As traditional industrial tenants have migrated outward, developers have been slow to engage in additional supply growth, prompting extremely tight vacancy in key industrial hubs in eastern Queens and Brooklyn, as well as the Bronx. Construction will fall more than 50 percent this year, with the largest expected delivery located on Staten Island, where the first portions of a 1.42 million-square-foot warehouse complex will come online. Despite a slower pace of completions, vacancy will tick up as rising rental rates deter significant lease signings.