Parsippany, N.J. (January 3rd, 2025) – The commercial real estate market in Northern New Jersey and Southern New York State is poised for accelerating growth in 2025 as falling interest rates and steady demand fuel sales and leasing activity across industrial and other niche sectors. The shift in momentum, according to Resource Realty of Northern New Jersey (RRNNJ), bodes well for industrial leasing, investment properties and specialized assets like data centers, which have remained resilient over the last two years.
“Demand for these sectors is driven by the rise in e-commerce, increased demand for last-mile distribution and growing technological infrastructure needs,” said Tom Consiglio, RRNNJ principal and founder. “These trends are expected to continue attracting investment as businesses align their operations with shifting consumer and technological demands.”
According to Greg Sabato, principal, the ability to secure high-quality, functional space in coveted locations is a priority for businesses aiming to remain competitive in 2025. “As technology continues to reshape how companies operate, we expect heightened demand for properties that support logistics, tech infrastructure, and specialized distribution needs,” he said.
Sabato projects that demand for 75,000- to 175,000-square-foot industrial properties will remain especially strong, with a notable surge from regional, national and global third-party logistics (3PL) users who have maintained a steady presence in Northern New Jersey and New York State throughout 2024. These businesses, which rely on strategically located properties for efficient distribution networks, continue to fuel growth in the sector. Vacancy rates for both industrial and light industrial spaces are expected to hold steady despite a surge in new supply in 2024, according to Sabato.
Brian Wilson, principal, also points out that while demand for industrial and investment sales remains strong, the limited inventory in the market will continue to drive competition. Despite an increase in sublease space, there is still steady demand, particularly for well-located properties. There is plenty of capital chasing deals and fueling investment activity in the industrial sector, as businesses and investors vie for space that can support growing operational needs.
“Although we’ve seen a significant amount of new industrial space completed in recent years within the New York State-New Jersey corridor, well-located, modern industrial properties remain in short supply,” Wilson said. “Prime locations that offer easy access to transportation networks and major markets continue to be highly coveted, and as demand for these spaces outpaces supply, we’re seeing rising prices and greater focus on industrial “flight to quality”.
In 2024, Resource Realty of Northern New Jersey witnessed a surge in transactional activity across the office sector as well, despite the challenges of evolving workplace practices. One example was RRNNJ’s completion of a 20,000 SF office lease in Parsippany for a high-profile professional services firm, highlighting the continued demand for functional office space, even amid a shift toward hybrid work in some industries.
Overall, the office market in Northern New Jersey is expected to have a mixed outlook, with suburban office vacancy anticipated to remain high, except for medical-related spaces, according to Principal Scott Peck. While certain office markets face challenges associated with high vacancy rates, the veteran broker believes suburban office sites still have a promising future.
“We’re seeing suburban office buildings finding new life with a surge in healthcare and medical tenancy while others are being repositioned as either industrial or residential/multifamily spaces,” Peck said. “As the demand for more functional spaces grows, these properties are being reimagined to meet the needs of a changing market.”
Looking ahead to 2025, while demand for office spaces continues to evolve, there is strong interest in specialized sectors such as AI/data centers, which have remained resilient through 2024, according to Peck.
“As market dynamics continue to shift, the commercial real estate landscape across Northern New Jersey and New York State is positioned for ongoing investment and growth across key sectors,” added Consiglio.
Based in Morris County, N.J., Resource Realty of Northern New Jersey is a premier provider of commercial real estate solutions delivered with the personalized attention and autonomy of a boutique firm. Custom services include sales and leasing, landlord and tenant representation, corporate advisory and consulting, and investment property acquisitions. The firm was founded as part of a collaborative consortium of three like-minded firms and has served communities across Northern New Jersey and New York State for more than 35 years.