New Jersey Office Market
The Northern New Jersey office market experienced a 40-basis-point decrease in vacancy rates quarter-over-quarter, reaching 19.1%, driven by heightened leasing activity and increased tenant demand. Leasing activity surged in 2024, exceeding 2.4 MSF during the fourth quarter alone. This represents a 23.1% increase since 2020, marking the highest activity level in the past five years. Net absorption was a positive 752,262 SF in the fourth quarter of 2024, reflecting a tighter market as large block availabilities become increasingly scarce. Year-over-year, availability dropped by 2.0%, signaling positive momentum in the market. Sublease availability also continues to decline, reaching 4.2%, its lowest level since the first quarter of 2020.
New Jersey Industrial Market
The vacancy rate rose by 20 basis points quarter-over-quarter to 5.7% in the fourth quarter of 2024. Despite increases in vacancy over the past two years, the market remains healthy, standing 110 basis points below the twenty-year trendline. Net absorption exceeded 800,000 SF as demand outpaced supply. Class A warehouse leasing surged throughout 2024, accounting for over 55.21% of total leasing volume year to date. Class A activity rose by 18.8% quarter-over-quarter, driven by highly optimized space entering the market and landlords offering generous concession packages. The average deal size exceeded 200,000 SF in the fourth quarter of 2024, reflecting a sustained flight to quality. The construction pipeline largely declined over the past year, with year-to-date deliveries totaling more than 10.3 MSF, the highest since 2020. However, this trend reversed in the latter part of 2024, coinciding with three interest rate cuts by the Federal Reserve.
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