New Jersey’s commercial real estate market in 2025 is in a state of transition, with different sectors experiencing both challenges and opportunities. Industrial leasing, which has been the state’s strongest driver for nearly a decade, is finally cooling. The office sector remains under pressure, though modern, well-located properties continue to perform. Retail real estate is thriving with record-low vacancies, while mixed-use developments across the state are reshaping downtowns and suburban hubs. Together, these forces are rewriting the future of real estate in the Garden State.
The industrial sector, long considered the backbone of New Jersey’s commercial real estate strength due to its location between New York and Philadelphia, has entered a period of recalibration. Leasing and investment sales are down sharply compared to last year, reflecting a slowdown after years of record growth. Vacancy in northern and central New Jersey has climbed to its highest point since 2013, a sign of increased supply and cautious demand. Sublease space is adding to availability as tenants reassess their long-term needs. Yet, the market is not without bright spots. Third-party logistics companies continue to sign leases, underscoring the state’s enduring appeal for distribution. In addition, the slowdown in new construction starts could ease the supply-demand imbalance, creating stability in the years ahead. Among the recent deals making headlines is a $19.4 million sale of an industrial portfolio in Piscataway and plans for a new speculative warehouse in Parsippany.
The office market continues to struggle with shifting tenant demands, though not all properties are affected equally. Leasing activity hit a decade-low in the first half of 2025, with older, outdated buildings struggling the most. The story is different, however, for “trophy” properties—modern buildings with high-end amenities, sustainable features, and transit connectivity. Tenants are gravitating toward these spaces, fueling a clear “flight to quality.” Jersey City, Newark, Morristown, and Summit are seeing some of the most notable activity in this segment. Southern New Jersey is also faring better than the north, with positive absorption in areas like Marlton and Moorestown, thanks in part to steady demand from professional services and healthcare users. Life sciences companies are another bright spot, driving leasing momentum and absorbing space at a time when other sectors remain cautious. Redevelopment is also ongoing, with older office buildings being converted into residential or industrial use, reflecting the need for adaptive strategies to combat oversupply.
Retail real estate is one of New Jersey’s strongest performers. Demand remains robust, driven by consumer spending and the state’s dense population centers. Northern New Jersey is heading toward a third straight year of record-low vacancy, with forecasts projecting a marketwide vacancy of just 3% by the end of 2025. Asking rents continue to rise, on track for a third year of growth above 5%, bringing averages close to $28.60 per square foot. Suburban areas, particularly Morris and Bergen counties, are seeing a surge in leasing from home goods, fitness, and leisure retailers. This activity has also attracted strong investor interest, with deals like a $26 million financing package for upgrades to the Blue Star Shopping Center highlighting the confidence in retail’s resilience.
Perhaps the most transformative activity is happening in mixed-use development. These projects are redefining communities by combining housing, retail, and public spaces into walkable destinations. In Paramus, Garden State Plaza’s major redevelopment is moving forward, blending new housing, retail, and green space into one of the state’s most prominent malls. In Red Bank, NJ Transit and Denholtz are advancing plans to transform land near the train station into mixed-income housing and commercial space, providing both economic revitalization and improved transit-oriented living. Hackensack’s downtown continues to evolve with multiple affordable housing and mixed-use projects, while in Newark, a historic office tower is being converted into affordable housing thanks to $93 million in tax credits. These projects represent a statewide commitment to modern urban planning and adaptive reuse.
Hoboken has also entered the spotlight with one of the state’s most significant financing deals this year. The Hoboken Urby project, at 256 Observer Highway, secured $162 million in construction financing, marking a milestone for the southern border of the city. Developed by Urby and Ironstate Holdings, the 16-story tower will feature 307 market-rate apartments, 38 affordable units, 17,425 square feet of retail, and a 152-space parking garage. Beyond the numbers, Hoboken Urby is being marketed as a lifestyle community, offering residents modern interiors, oversized windows, communal vegetable gardens, fitness facilities, and dedicated work-from-home spaces. Designed by Shawn Hausman Design, the project reflects the fusion of hospitality and residential living, a trend that continues to gain traction across the region. Scheduled to open in the summer of 2027, the development is set to become a cornerstone of Hoboken’s evolving skyline.
New Jersey’s real estate market in 2025 demonstrates the complexity of a state in flux. Industrial growth has cooled but remains underpinned by logistics demand. Offices face challenges but offer opportunities for premium properties and life sciences hubs. Retail is thriving on the strength of limited supply and consistent consumer demand. Mixed-use projects are reshaping how residents live, work, and shop, from Hoboken to Hackensack and beyond. For developers, investors, and communities, these shifts reflect both challenges and opportunities that will define the next chapter of the Garden State’s economy. More updates on these developments and statewide trends can be found at Explore New Jersey Real Estate.
