JLL’s first-quarter New Jersey industrial report showed an increase in leasing activity, driven by the return of name-brand tenants to the market. In addition to leasing being on the rise, vacancies have also been declining.
For the first time since mid-2022, overall vacancy fell to 25.4%, which was driven by roughly 584,000 square feet of positive net absorption and the removal of outdated office buildings from the inventory base. This marks the fourth consecutive quarter of absorption.
“Four straight quarters of positive absorption and more than half a million square feet absorbed in Q1 alone tells us that companies are still making decisions, still committing to space, but they’re being very selective about what they take,” said Tim Greiner, JLL executive managing director.
Leasing activity in Class A space remained concentrated, accounting for roughly 90% of absorption. This data supports the findings that tenants have a preference for higher-quality buildings. In the foreseeable future, continued demand for premium office space is expected to push rents higher, with top-tier “Premier” Class A assets currently commanding roughly 20% over the more broad Class A market.
An increase in leasing velocity combined with the removal of nearly two million square feet of outdated office buildings from the inventory base has resulted in downward pressure on the Northern and Central New Jersey overall vacancy rate in the first quarter of 2026. Roughly 90% of the roughly 584,270 square feet that was absorbed in the state’s office market was concentrated in the Class A market. This is a direct result of office tenants continuing to seek out higher-end spaces to house their operations.
Boasting 207,920 square feet of positive net absorption, the Route 24 submarket held the largest volume of Class A absorption in the state during Q1. As a result, the Route 24 Class A vacancy rate fell by nearly four percentage points.
In the coming year, steady demand for Class A office space is expected to continue upward pressure on rental rates. New Jersey’s average asking rent for Class A was $34.20 per square foot in early 2026, a jump from the $33.94 per square foot that it held roughly a year ago.