New Jersey Office Market
Occupiers are increasingly gravitating toward newer, recently optimized buildings, with amenity-rich properties seeing stronger leasing activity and rental rate growth. Net absorption totaled 156,468 SF in the second quarter of 2025, as the office market continues to stabilize. Leasing activity moderated in the first half of 2025, with approximately 2.3 MSF leased across Northern New Jersey during the second quarter. Class A assets continue to attract significant space commitments, with all five of the quarter’s largest transactions occurring within this tier. The average deal size rose to 4,145 SF. The overall vacancy rate declined to 18.3%, improving by 150 basis points year-over-year as demand held steady. Office conversions have played a key role in curbing vacancy increases by removing obsolete space from the market.
New Jersey Industrial Market
The vacancy rate rose by 110 basis points year-over-year to 6.2% in the second quarter of 2025. Northern New Jersey currently sits 60 basis points below the 20-year trendline of 6.8%. Sublease availability reached over 11.7 MSF at the close of the second quarter of 2025, marking a 4.2% quarter-over-quarter increase. The continued growth is a concern, with availability up 15% since the end of Q4 2024. The trend underscores that occupiers remain focused on trimming industrial footprints as they navigate broader macro headwinds. Industrial leasing activity was just under 7.0 MSF in the second quarter of 2025, totaling just under 13.5 MSF year-to-date. Activity surged in the second half of 2024, reaching over 17.7 MSF. 3PLs remain active, accounting for four of the five largest new leases during the quarter.
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