The commercial real estate landscape in Northern and Central New Jersey presented a tale of two markets during the second quarter of 2026, as the office sector paused its recovery while the industrial market maintained strong momentum, according to data from Cushman & Wakefield.
After a year of steady improvement—marked by four consecutive quarters of positive net absorption totaling 1.5 million square feet—the regional office market saw a shift in momentum in Q2. The market recorded 929,245 square feet of negative net absorption, pushing the vacancy rate up 60 basis points quarter-over-quarter to 22.0%.
According to Cushman & Wakefield, this increase was primarily driven by several large blocks of space returning to the market. Despite this cooling in net absorption, leasing activity actually accelerated, rising 33% from the previous quarter to reach 1.6 million square feet.
“The second quarter reflects more of a pause than a reversal,” Bill Simoneau, senior research manager at Cushman & Wakefield said. “Large space returns pushed vacancy higher, but leasing activity actually accelerated and continues to favor well-located, high-quality Class A buildings. Companies remain willing to commit to quality space when it supports their long-term workplace strategy.”
Class A assets remained the most sought-after, accounting for more than half of all leasing volume and commanding an average rent of $36.15 per square foot (psf). Overall, average asking rents across the market softened slightly to $32.29 psf. Notable transactions during the quarter included:
- ACE American Insurance: 117,280-sf renewal at 10 Exchange Place.
- Englewood Health: 101,325-sf sublease at 930/940 Sylvan.
- Capital Health: 72,000-sf new lease at 275 Phillips Boulevard.
Industrial leasing surge continues
In contrast to the office sector’s recalibration, the industrial market in Northern and Central New Jersey continued to thrive. Occupier demand remained robust, driven largely by third-party logistics (3PL) providers, logistics users, and retailers.
Key performance indicators for the industrial sector included:
- Leasing Volume: Warehouse and distribution leasing reached 7.3 million square feet in Q2, bringing the year-to-date total to 16.0 million square feet—a 42.6% increase compared to the same period in 2025.
- Vacancy: The vacancy rate dropped 50 basis points year-over-year to 9.3%, as large vacant blocks were absorbed despite an influx of sublease availability.
- Absorption: The market saw its second consecutive quarter of positive net absorption, totaling 416,739 square feet.
