As the first quarter of 2026 hits its stride, the commercial real estate landscape across Northern New Jersey and Southern New York is undergoing a strategic “recalibration.” According to the latest market report from Resource Realty of Northern New Jersey (RRNNJ), the hyper-growth of previous years has evolved into a period of stabilization, with a sharp focus on asset functionality and the resilient “small-bay” industrial sector.
Following a robust 2025—where the firm closed 92 transactions totaling nearly 1.8 million square feet—the I-80 corridor remains the heartbeat of regional activity. However, the nature of the deals is changing.
While the “big-box” sector (100,000 to 500,000 square feet) saw a plateau in 2025 due to a surplus of new deliveries, the sub-50,000-square-foot market is thriving. These “small-bay” spaces are increasingly occupied by private regional and local companies providing essential goods and services.
“Last year the market experienced unquenched demand for spaces under 50,000 SF,” Tom Consiglio, RRNNJ founding principal said. “For these tenants, highway and roadway access remains the highest priority.”
Key 2025 Indicators of this Shift:
- Leasing momentum: A 52,606-square-foot lease in Clifton and over 116,000 square feet of leasing activity along the western I-80 corridor.
- Tightening vacancy: Principal Greg Sabato predicts vacancy rates in the small-bay sector will continue to decrease throughout 2026.
- Renewals: 35% of RRNNJ-arranged lease transactions in 2025 were renewals, signaling a preference for tenants to stay put in functional spaces.
With developable land virtually non-existent in core Northern New Jersey submarkets, 2026 is becoming the year of the “Legacy Upgrade.”
Principal Brian Wilson noted that the market’s leaders will be owners who proactively modernize existing inventory. “We are seeing a heightened focus on functional specs—specifically ceiling heights, loading dock ratios, and trailer parking,” Wilson explained. Modern regional distributors now require more sophisticated power and logistical capabilities than older assets traditionally offer.
While New Jersey focuses on smaller, high-utility spaces, Southern New York State has emerged as the premier destination for large-scale, modern distribution.
Driven by the availability of land and access to Stewart Airport, the region saw significant institutional momentum in 2025, including:
- A 125,000-square-foot FedEx Corp. renewal in Newburgh.
- The launch of the Newburgh South Logistics Center, a 422,000-square-foot speculative project by Brookfield Properties.
“This region is especially attractive because of its superior highway infrastructure,” Principal Scott Peck said. “The success in Newburgh proves that global tenants are still prioritizing these strategic transit hubs for major operations.”
