The industrial real estate market across Northern New Jersey and Southern New York State is experiencing a rebound driven by evolving tenant demands and a dynamic construction pipeline, according to a recent market analysis by Resource Realty of Northern New Jersey (RRNNJ). The Parsippany-based firm reports a significant recovery following the challenges of 2024/early 2025, which includes a cautious approach fed by tariff-induced supply shortfalls.
“We’re seeing a clear rebound across the entire spectrum of industrial properties in this corridor,” says Tom Consiglio, RRNNJ principal and founder. “While 2024 presented headwinds, the fundamental drivers of strong demand and strategic location remain in place. The market, like businesses, is adjusting.”
Principal Scott Peck also highlights the interconnectedness of these industrial corridors. “Trends in one market have a rippling effect into the other,” he explained. “We’re observing similar patterns across both areas as tenants prioritize efficiency, with larger clients opting for modern solutions and small-to-mid-sized operators seeking quality Class B or smaller square-footage spaces.”
Morris County: A Regional Bellwether
RRNNJ points to Morris County, NJ, as a prime example of these regional dynamics. Its strategic location, offering easy access to New York City and major transportation arteries, continues to fuel demand for distribution and logistics. Broad in nature, this trend stems from local services, a robust pharmaceutical industry and the ever-expanding e-commerce sector. Furthermore, the quality and diversification of the labor force contributes to the desirability of Morris County.
The county itself boasts an excellent highway infrastructure, including direct access to I-80, I-287 and Routes 10, 24 and 46. The broader North Jersey region further benefits from the New Jersey Turnpike, Garden State Parkway, New York State Thruway, I-78 and I-95, all connecting to critical logistics hubs such as the Port of New York and New Jersey, extensive freight rail networks and major air cargo points such as Newark Liberty International Airport (EWR).
“Like Morris County, industrial submarkets in New Jersey’s Essex, Hudson, Union, Bergen, Passaic, Warren and Sussex counties are showing remarkable resilience,” noted Principal Brian Wilson. “There’s a strong appetite for small-bay facilities, driven by the area’s diverse industries and its location to the workforce.”
While vacancy rates saw a temporary spike in Q4 2024 due to nationwide supply chain issues, current rates for existing product in Morris County are a healthy 4 percent, well below the historical average of 5.4 percent. Lease rates, according to RRNNJ, are expected to grow moderately through year-end.
Navigating Supply-Demand Dynamics
Despite the positive trends, commercial real estate assets are always impacted by outside influences. For industrial, a supply-demand imbalance persists, with approximately 23 million square feet of existing industrial inventory in Morris County alone. New construction primarily targets larger tenants (70,000-500,000 SF), creating a disconnect for spaces under 50,000 SF, which account for most industrial transactions.
“This dislocation between new supply and the prevailing tenant size is a key consideration,” said RRNNJ Principal Greg Sabato. “Developers are building for large players, but a significant portion of the market seeks smaller, more flexible spaces. This dynamic requires thoughtful leasing strategies and enhanced tenant incentives to ensure occupancy.”
Northern New Jersey’s construction pipeline is substantial, with nearly 10.2 million square feet of new inventory delivered since 2022 and an additional 2 million square feet of seven logistics buildings currently under construction in Morris County. One of these notable projects being marketed by RRNNJ includes the Logistics Center at Parsippany, 8 Lanidex Plaza West (140,031 SF), with a targeted occupancy delivery in Q2 of next year.
While rent growth has moderated and the average asking rent remains stable, the industrial market is the cornerstone of the regional economy.
RRNNJ anticipates continued growth and adaptation across North Jersey and Southern New York, with high demand for small-bay spaces. This trend is now signaling opportunities for strategic development in the industrial sector’s ever-enduring period of transition.
Read more on American Journal of Transportation | AJOT | 1-800-599-6358
