Strong Industrial Demand and Resilient Office Market for Q1

On Apr 2, 2026

Global real estate services firm Cushman & Wakefield has released its first-quarter 2026 market statistics for the New Jersey industrial and office real estate sectors. The latest data highlights surging demand in the warehouse and distribution market, alongside a stabilizing office sector driven by an ongoing flight to quality.

The New Jersey industrial market demonstrated robust performance to start the year, recording 8.6 million square feet of new leasing activity. The market also achieved 3.7 million square feet of positive net absorption, supported by high tenant demand and the successful delivery of several new projects. As a result of this strong activity, the industrial vacancy rate tightened to 9.3%. Meanwhile, the overall net asking rental rate reached $16.66 per square foot.

“The large leasing volume we saw this quarter shows the lasting strength of New Jersey’s industrial corridor,” said Felix Soto, research manager at Cushman & Wakefield. “With strong growth and less available sublease space, the market remains highly competitive. We expect this energy to continue as companies seek prime distribution locations to support their supply chains.”

In the New Jersey office market, conditions experienced a modest adjustment following three straight quarters of occupancy gains. First-quarter leasing activity totaled 1.2 million square feet, with demand heavily concentrated in premier Class A properties. The overall office vacancy rate stood at 21.8 percent. Despite the slight softening in absorption, average overall rental rates showed upward pressure, rising to $32.43 per square foot.

“While the office sector saw a slight pullback early in the year, market conditions are notably healthier than they were a year ago,” said Bill Simoneau, Senior Research Manager at Cushman & Wakefield. “The steady reduction in available sublease space and the higher rents commanded by top-tier assets indicate that companies are actively investing in better work environments. We expect the desire for high-quality spaces to drive office leasing decisions throughout the rest of the year.”

Additionally, a new Cushman & Wakefield analysis on office-to-other-use conversions highlights a significant pipeline of inventory being removed from the market, which is expected to further influence leasing dynamics. Approximately 24.2 million square feet of office space across New Jersey is proposed or undergoing conversion, with more than 10 million square feet still occupied. As these tenants are displaced, many are expected to remain in-state, intensifying competition for high-quality space and reinforcing the ongoing flight-to-quality trend across the region.

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