The Northern and Central New Jersey office market is entering 2026 on a note of cautious optimism. New data from JLL reveals that the overall vacancy rate slipped 20 basis points to 26.2% in the final quarter of 2025, marking its lowest point in nearly three years.
The decline follows a stable period where vacancy held at 26.4% throughout much of the year. This year-end momentum was driven by a surge in leasing activity and a significant contraction in the available sublease inventory.
The fourth quarter saw nearly 330,000 square feet of positive net absorption, bringing the yearly total to over 719,880 square feet. This performance outpaced 2024’s absorption of roughly 506,670 square feet, signaling that corporate tenants are once again making long-term commitments to the region.
The quarter’s flagship transaction was the relocation of Selective Insurance Company. The carrier leased 122,525 square feet at 103 JFK Parkway in Short Hills. Selective Insurance will move its corporate headquarters to this Class A building while maintaining its existing operations in Branchville.
A key factor in the market’s stabilization is the steady emptying of the sublease pipeline. At the peak of office restructuring in mid-2023, Class A sublease space sat at nearly 7.9 million square feet. By the end of 2025, that figure had plummeted to less than 5.2 million square feet—a five-year low.
Experts attribute this decline to:
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High-End Absorption: Tenants actively leasing premium “plug-and-play” spaces.
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Direct Transitions: Sublease blocks returning to landlords as direct availabilities.
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Withdrawals: Companies opting to re-occupy their own space as return-to-office mandates solidify.
“New Jersey’s office market is quietly stabilizing. We’ve now seen three consecutive quarters of positive absorption, with nearly 720,000 square feet absorbed in 2025, signaling that occupiers are making deliberate, long-term real estate decisions again
“The steady decline in sublease availability, now at a five-year low, is removing a major overhang and helping vacancy trend downward, particularly in Class A assets,” Tim Greiner executive managing director, leasing advisory stated.
The storyline for the coming year is expected to be dominated by “flight-to-quality.” Occupiers are increasingly abandoning outdated “commodity” offices in favor of newly constructed or heavily renovated buildings that offer premium amenities and state-of-the-art wellness features.
However, for the buildings that cannot be modernized, a different fate awaits: demolition.
Because of the extreme scarcity of developable land and the insatiable demand for logistics space and housing, roughly 90% of the 1.6 million square feet slated for demolition in 2026 will be replaced by modern warehouses and residential complexes.
By removing obsolete inventory from the stats, the market is effectively “right-sizing” itself, which is expected to maintain downward pressure on the vacancy rate throughout the next twelve months.
