Teterboro, N.J. – NAI James E. Hanson, the largest New Jersey-based full-service independent commercial real estate firm, has released its 3Q 2026 Office Report, showing that year-to-date net absorption for Class-A office space turned positive for the first time since 2019 as tenants continue to gravitate toward high-quality and well-located buildings. Overall vacancy declined to 25.2%, down nearly a full percentage point from the same time last year.
The market remains bifurcated, with Class-A properties accounting for more than 65% of leasing activity through the third quarter while older Class-B and Class-C buildings struggle to capture tenant demand. Total leasing activity measured 3.4 million square feet, on par with the same period last year. Overall net absorption remains negative as tenants vacate Class-B space, but it has improved to negative 430,575 square feet from negative 1.2 million square feet through the third quarter of 2025.
Overall average asking rents rose to $32.32 per square foot from $31.46 a year ago, sustained by a steady supply of higher-quality space coming to market and strong tenant interest in that space. Class-A rents reached a historic high of $32.46 per square foot, while Class-B space offered significant savings, averaging $26.69 per square foot. Rents remain highest along the Hudson Waterfront, where overall asking rates averaged $42.83 per square foot.
The removal of Class-B and Class-C buildings and properties is further concentrating demand on premier assets. Recent estimates suggest more than 20 million square feet of office space has been removed from the suburban market, and Parsippany has been at the epicenter of this redevelopment in Northern New Jersey, with more than 5 million square feet slated for conversion to industrial, multifamily or retail use.
“Activity and demand in the Northern New Jersey office market remain rooted in ongoing flight to quality,” said James Delmonte, Vice President and Director of Research at NAI James E. Hanson. “Occupiers are committing to the best buildings, which is driving Class-A absorption into positive territory for the first time in several years. At the same time, the conversion of older office stock to other uses is shrinking supply and strengthening the outlook for the high-quality assets that remain.”
Submarket performance highlighted where tenant demand is concentrating:
- Woodbridge/Metro Park led all submarkets with nearly 565,000 square feet leased year-to-date, holding vacancy at 19.5% with Class-A asking rents averaging $38.95 per square foot.
- West Essex/Route 24 recorded the strongest net absorption in the market at more than 200,000 square feet, with Class-A asking rents averaging $39.18 per square foot.
- The Hudson Waterfront commanded the region’s highest rents, with Class-A space averaging $43.58 per square foot, highlighted by ACE American Insurance Company’s 117,280-square-foot renewal at 10 Exchange Place in Jersey City.
- Monmouth posted 16.8% vacancy, among the lowest in the region, along with more than 385,000 square feet leased year-to-date, the second-highest total of any submarket.
- Bergen County recorded 19.2% vacancy and more than 350,000 square feet of leasing year-to-date, including Englewood Health’s 101,325-square-foot sublease at 930 Sylvan Avenue in Englewood Cliffs.
- Union maintained the lowest vacancy rate in the market at 9.5%, followed by Urban Essex at 14.6%.
Investment sales activity year-to-date was led by Saadi Group’s $56.5 million acquisition of the 694,327-square-foot property at 30 Knightsbridge Road in Piscataway from Keystone Property Group. Other notable sales included Real Capital Solutions and Lamar Companies’ acquisition of 30 Montgomery Street in Jersey City and Deugen Development’s purchase of 5 Wood Hollow Road, known as “The QUAD,” in Parsippany.
To download the full 3Q 2026 Office Report, visit https://www.naihanson.com/market-reports/.
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