New Jersey Commercial Office Space for Rent

Q4 2025

Northern & Central New Jersey Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Northern and Central New Jersey commercial real estate (CRE) market is characterized by signs of stabilization and cautious optimism as it approaches 2026 [1, 4]. The Office sector is seeing positive net absorption for the first time in recent quarters, driven by a persistent "flight to quality" into Class A assets [1]. Industrial fundamentals are balancing out; while vacancy sits near decade highs due to recent supply deliveries, leasing velocity has rebounded significantly [4, 5]. Retail remains the tightest sector with vacancy rates below 4% in core counties, while Multifamily faces moderate rent deceleration as it absorbs a final wave of post-pandemic supply [6, 7].

TenantBase Proprietary Data [9] highlights the distribution of active tenant demand over the last 90 days:

  • Retail/Storefront dominated market activity with 55.32% of all searches [9].
  • Warehouse was the second most active sector at 39.58% [9].
  • Office accounted for 5.09% of total search volume [9].

Office Market

Market Overview New Jersey's office market is actively correcting, with Northern New Jersey recording its first signs of positive absorption in 2025 as tenants upgrade to amenity-rich spaces [1].

  • Vacancy & Availability: The vacancy rate in Northern New Jersey improved to 18.5%, an 80-basis-point decline year-over-year [1]. However, broader market availability remains elevated at 23.3% due to legacy Class B inventory [1].
  • Net Absorption: The Northern NJ market posted positive net absorption of 324,502 SF in Q3 2025, positioning the region for a positive finish to the year [1].
  • Rental Rates: Average asking rents have remained relatively flat at $28.61 per SF gross [3]. Class A assets continue to command stability, while Class B properties face downward pressure [3].
  • Market Drivers: Leasing activity in Q3 slowed to 1.9 million SF, but high-quality assets captured 69% of this demand [1]. The lack of large-block transactions continues to weigh on overall velocity [2].

TenantBase Activity [9]

  • Demand Share: Office accounted for 5.09% of total search volume [9].
  • Lease Term Preference: Demand is concentrated in short-term commitments [9]:
    • Less than one year: 31.25% of deals [9].
    • 2-3 Years: 31.25% of deals [9].
    • 3-5 Years: 18.75% of deals [9].
  • Size Requirements: Tenants seeking shorter flexibility require slightly larger footprints than typical startup demand. The average lower SF required for a Less than one year term is 2,667 SF, compared to 2,017 SF for a 3-5 Years term [9].

Industrial & Warehouse Market

Market Overview The industrial sector has stabilized following a period of oversupply, with leasing velocity surging in Q3 2025 to catch up with available inventory [4, 5].

  • Vacancy & Rent: The vacancy rate held steady at 7.2% after ten consecutive quarters of increases [4]. Average NNN asking rents hover between $13.87 and $15.36 per SF, stabilizing after a period of softening [5].
  • Demand & Supply: Net absorption turned positive, reaching 1.3 million SF in Q3 2025, driven by 3PLs and logistics firms seeking Class A space [4]. Leasing activity surged 13% above the five-year quarterly average [4].
  • Construction: The pipeline has moderated to 7.1 million SF, its second-lowest level since 2019, which will help tighten the market in 2026 [4].

TenantBase Activity [9]

  • Demand Share: Warehouse accounted for 39.58% of total search volume [9].
  • Lease Term Preference: Demand is balanced, with a plurality of tenants seeking mid-term leases [9]:
    • 3-5 Years: 33.78% of deals [9].
    • Less than one year: 17.57% of deals [9].
    • 1-2 Years: 17.57% of deals [9].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 5,605 SF, while the 5+ Years term average requirement is 5,429 SF [9].

Retail Market

Market Overview Retail fundamentals in Northern and Central New Jersey remain exceptionally strong, characterized by limited availability and resilient consumer spending [6].

  • Vacancy & Availability: The vacancy rate in Northern New Jersey stands at a tight 3.4% [6]. Hudson County recorded the lowest rate nationally for major submarkets at 1.7% [6].
  • Net Absorption: While absorption dipped slightly negative in Q2, strong leasing from small-box operators (restaurants, personal care) has kept vacancy stable [6].
  • Market Drivers: An affluent consumer base is driving demand for neighborhood centers, even as big-box expansion slows [6].

TenantBase Activity [9]

  • Demand Share: Retail/Storefront activity dominated with 55.32% of all search volume [9].
  • Lease Term Preference: Retail tenants show a clear preference for standard commercial terms [9]:
    • 3-5 Years: 34.62% of deals [9].
    • 1-2 Years: 20.51% of deals [9].
    • 5+ Years: 17.95% of deals [9].
  • Top Locations: Tenant interest is spread across key urban and suburban hubs (deal counts) [9]:
    • Hackensack: 6 [9].
    • Jersey City: 6 [9].
    • Newark: 6 [9].

Multifamily Market

Market Overview The multifamily market is adjusting to a supply crest, with rent growth moderating as new luxury units compete for tenants [7].

  • Vacancy & Occupancy: The vacancy rate in Northern New Jersey edged up to 5.6% as deliveries outpaced absorption [7]. Class A vacancy is notably higher at 10.7% due to the concentration of new supply [7].
  • Rents: Rent growth has decelerated to 2.0% year-over-year, averaging roughly $2,253 per unit [7].
  • Construction: Approximately 8,000 units are under construction, but starts have fallen sharply, signaling the end of the current supply boom [7].
  • Investment: Sales volume rebounded to $856 million in Q3, driven by private capital targeting luxury assets [7].

2026 Outlook

Looking ahead to 2026, the New Jersey market is poised to shift from "resilience to optimism" [8].

  • Office Evolution: Demand will largely concentrate in trophy assets and transit hubs, while obsolete suburban campuses will continue to face redevelopment pressure [1, 8].
  • Industrial Tightening: With the construction pipeline shrinking, vacancy is expected to peak in mid-2026 before tightening again, renewing upward pressure on rents [4, 8].
  • Investment Returns: Capital markets are thawing, with investors expected to aggressively target industrial and multifamily assets in supply-constrained submarkets [8].

Sources

  1. Newmark: Northern New Jersey Office Market Overview Q3 2025
  2. CBRE: New Jersey Office Figures Q3 2025
  3. Lee & Associates: Q3 2025 New Jersey Office Market Report
  4. CBRE: Northern and Central New Jersey Industrial Figures Q3 2025
  5. Avison Young: New Jersey Industrial Market Report Q3 2025
  6. Institutional Property Advisors: Northern New Jersey Retail Market Report Q3 2025
  7. Matthews: Northern New Jersey Multifamily Market Report Q3 2025
  8. Cushman & Wakefield: United States Outlook 2026
  9. TenantBase Proprietary Market Data (New Jersey - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.