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 30 basis points quarter-over-quarter to 5.9% in the first quarter of 2025. Northern New Jersey currently sits 90 basis points below the twenty-year trendline of 6.8%. Net absorption registered at 582,000 SF, even as industrial leasing activity settled into a more measured pace. Industrial leasing totaled 6.6 MSF in the first quarter of 2025, following a strong second half of 2024 that reached over 9.1 million SF. The slowdown reflects a more cautious approach from occupiers amid growing economic uncertainty. While some tenants are delaying decisions due to ongoing market and trade volatility, Chinese 3PLs have remained active in leasing so far in 2025. Despite the overall moderation in activity, Class A warehouse leasing accounted for 49.2% of total leasing volume year to date.
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