Cushman & Wakefield published its fourth-quarter industrial and office market statistics for Northern and Central New Jersey. Despite facing challenges, the industrial market highlighted its resilience with strong leasing activity, while the office market exhibited signs of stabilization as tenant recommitments showed a positive trajectory.
“Despite increasing new supply, the industrial market’s resilience is evident in the strong leasing activity. Key tenants are demonstrating continued confidence in New Jersey’s strategic location and infrastructure. This trend underscores the importance of New Jersey as a logistics hub, attracting significant interest from major players,” John Obeid, senior research manager.
The industrial market witnessed a dynamic year in 2024, characterized by a mix of challenges and opportunities. A surge in new warehouse supply added 13.1 million square feet of mostly vacant space, driving the year-end vacancy rate to 9.0%, its highest since the first quarter of 2013. However, tenant demand remained steadfast, as new leasing activity totaled a remarkable 27.1 million square feet. This represents the strongest annual performance since the record-breaking year of 2021.
Big-box transactions were a major driver for industrial leasing, with 24 new leases exceeding 250,000 square feet—double the number recorded in 2023.
“Although new leasing activity slowed in the office market this year, tenant recommitments and demand for top-tier product helped mitigate broader occupancy losses,” Felix Soto, senior research analyst said. “These commitments reflect a cautious optimism among businesses as they adapt to the evolving work environment.”
The office market faced a slower year, with new leasing activity totaling 7.0 million square feet, marking the lowest annual tally since 2020. However, tenant recommitments and renewals provided a silver lining, surging by 23.3% year-over-year and contributing 2.9 million square feet of activity. Significant corporate recommitments underscored ongoing confidence despite broader market pressures.
Submarkets like the Hudson Waterfront and the I-78 Corridor stood out for their activity, driven in part by high-quality office spaces. However, headwinds persisted, with negative net absorption recorded for the 10th consecutive quarter, and the overall vacancy rate climbing to 23.0%.
“While each sector faces its unique set of challenges, the fourth-quarter statistics underscore the resilience of Northern and Central New Jersey’s commercial real estate markets. With strong leasing fundamentals in the industrial sector and signs of recovery in the office market, particularly for top-tier product, the region continues to adapt to evolving market dynamics,” Obeid added.
