Economy: The Port of New York and New Jersey Remains Steady in August
The Port of New York and New Jersey (Port of NY & NJ) maintained a steady pace in August, as volume eased from last year’s tariff-driven surge. Volume in August decreased 5.5% year-over-year (YOY) to 789,875 Twenty-Foot Equivalent Units (TEU), bringing year-to-date (YTD) volume to 6.0 million TEUs—down 1.1%. Imports dipped 1.4% YTD to 3.0 million TEUs, while exports declined 2.1% to 942,028 TEUs.
Rail volume fell 9.8% YOY in August to 55,028 containers, while auto volume declined 6.8% to 31,225 vehicles, leaving YTD rail and auto volume down 4.1% and 8.1%, respectively.
Overview: Large Transactions Continue to Support Occupancy Growth
New Jersey’s industrial market demonstrated persistent demand in Q3 2026, as new leasing activity coupled with the delivery of additional build-to-suit (BTS) and preleased speculative projects resulted in a third consecutive quarter of occupancy gains. Several large blocks were once again removed from the market, as net absorption totaled 4.8 million square feet (msf)—the strongest quarterly total of 2026. The market also recorded 25 new leases exceeding 100,000 (square feet) sf, most of which occurred within Class A properties.
As occupiers re-evaluated their space needs, sublease availability declined from the previous quarter and moved further below the peak recorded at the end of 2025.
Demand: Strong Occupier Demand Drives Leasing Activity
New Jersey’s industrial market posted strong demand in the third quarter, with 9.3 msf of new leasing activity. Leasing volume decreased 4.4% YOY but exceeded the two-year quarterly average of 8.1 msf by 13.9%, bringing the YTD total to 26.9 msf—a 15.8% increase YOY.
Leasing was concentrated in the Turnpike Corridor, which accounted for 74.2% of YTD demand—led by the Exit 8A (4.7 msf) and the I-287/Exit 10 (4.0 msf) submarkets. Much of the new leasing occurred in recently completed buildings that had remained vacant since delivery. Though absorption has taken time, occupiers continue to favor modern warehouse facilities located within key Turnpike Corridor submarkets.
As leases signed during the COVID-era begin to expire, YTD renewal activity increased 76.2% from the prior year. Through the third quarter, occupiers completed 15.8 msf of lease renewals, including 5.4 msf signed during the quarter.
User-sales activity gained momentum in the third quarter, driven by buyers pursuing strategic acquisition opportunities amid elevated rents and ongoing market uncertainty. The most notable transaction was F.W. Webb’s $55.0-million acquisition of 1 Cragwood Road in South Plainfield, a newly delivered speculative warehouse that was vacant at the time of sale.
Supply: Occupancy Gains Accelerate as Sublease Availability Declines
Occupancy gains continued for the third consecutive quarter, at an accelerated pace, as net absorption totaled 4.8 msf—bringing the YTD total to 9.0 msf. Demand was concentrated within Class A warehouse and distribution space, which accounted for 3.6 msf of absorption during the quarter and 11.1 msf YTD. This momentum helped bring the warehouse and distribution vacancy rate under 9.0% for the first time since Q3 2024, while keeping YTD warehouse and distribution net absorption positive at 9.7 msf.
As occupiers re-evaluated their space needs, sublease availability declined 4.4% from the previous quarter to 8.6 msf—16.8% below the all-time high of 10.1 msf recorded in Q4 2025. Vacant sublease space accounted for 15.2% of total market vacancy, down 110 basis points (bps) from its peak. The overall vacancy rate decreased 60 bps from the previous quarter and 20 bps YOY to 8.1%.
Non-Class A warehouse and distribution properties showed signs of recovery, with third quarter net absorption totaling 1.5 msf, though YTD net absorption remained negative at 1.3 msf.
Pricing: Asking Rents Moderate as Warehouse and Distribution Space Retains a Premium
Industrial rents softened modestly during the quarter as new supply entered the market, though pricing remained historically elevated. The average asking rate decreased 4.0% YOY to $16.12 per square foot (psf).
At $16.43 psf, warehouse and distribution buildings continued to command the highest rents, reflecting sustained tenant demand for modern logistics space. Additionally, YTD average taking rent for Class A space reached $16.67 psf, representing a 15.8% premium over non-Class A warehouse and distribution properties.
Construction: Deliveries Rebound as New Starts Slow Amid Healthy Tenant Demand
After warehouse and distribution completions moderated in the second quarter, development activity rebounded in the third quarter, with five projects delivered totaling 813,677 sf—nearly double the previous quarter’s volume. The largest delivery was Johnson Development Associates’ 333,580-sf facility at 740 Corporate Boulevard in Robbinsville, which was preleased to Dunlop. BTS development also remained active, highlighted by Core & Main’s 53,315-sf warehouse at 500 Belleville Turnpike in North Arlington.
Only one project totaling 60,060 sf broke ground during the third quarter, bringing YTD construction starts to 4.0 msf. Currently, 35 warehouse and distribution projects totaling 8.1 msf are under construction, led by the I-287/Exit 10 submarket with 1.9 msf underway. As demand for quality warehouse space persists, 59.4% of the new construction delivered so far this year has been preleased or occupied upon completion.
