Commercial real estate firm NAI James E. Hanson today released its 2025 Industrial Report for the first quarter covering real estate trends in the northern and central New Jersey market.
Hanson said the northern New Jersey industrial market appears to have entered a period of balance after several years of growth and despite the uncertainty regarding increased tariffs. Although properties with logistics and distribution tenants have more exposure to a drop in imports, these types of companies were significant drivers of demand in the first quarter.
Here are some highlights from the report:
- Net absorption, the balance between lease activity and available space, remained negative for the eighth consecutive quarter. Year-over-year leasing activity was off by 2 million square feet, as more than 3 million square feet of available space came on the market from new construction. Hanson thinks the market may return to positive absorption by the end of the year because of a significant decline in new construction completions.
- The pace of new construction deliveries slowed during the first quarter with 2.2 million square feet completed. There were 4.6 million square feet delivered in the first quarter 2024 and 14 million square feet added for the year. There are 8.3 million square feet under construction with 6 million slated for completion this year.
- Despite macroeconomic uncertainty driven by tariffs, logistics and distribution companies continued to significantly drive demand in the first quarter of 2025.
- The vacancy rate for the first quarter of 2025 remained virtually the same as the fourth quarter of 2024, increasing just 0.1% to 6.1%. However, the vacancy rate increased by more than a percentage point year-over-year.
- Average asking rents across northern and central New Jersey decreased slightly from $14.06 per square foot in the fourth quarter to $14.03 in the first quarter 2025. Average rates are down from a historical high of $14.35 that was reached in the middle of last year. However, average starting asking rents in the strongest submarkets, such as the Meadowlands and Ports areas, top $17 per square foot.
- Despite a challenging interest-rate environment, institutional investors have been the most active buyers of industrial properties on a national level for the past several years. During the first quarter the most active buyers were Prologis, Thor Equities, Investco Real Estate and private owners and developers including Faropoint Investments and Ardena US, LLC.
- Top sale for the quarter was the purchase by Prologis for Atlantic Realty NJ’s portfolio of 1.1 million square feet in Monroe Township for $197.4 million. The top lease transaction was executed by Ryder for 405,256 square feet in Port Reading.
NAI James E. Hanson, with offices in Parsippany and Teterboro, provides property statistics, demographic information, economic analysis, and comprehensive market intelligence for the Northern & Central New Jersey real estate markets.
