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)