Industrial expansion in New Jersey faces rising vacancies, community pushback
Writer: Mariana Hernández
March 2025 — For years, New Jersey’s industrial real estate market has been a major economic driver, due to the surge of e-commerce and logistics demands. Even so, this rapid expansion is showing signs of a slowing vacancy rate rise, new warehouse spaces outpacing current demand and public sentiment given the critical growth of large-scale warehouse developments.
“As demand for industrial assets in these markets remains strong, we continue to guide clients toward opportunities that combine strategic locations, strong tenancy, and innovative property solutions,” said Kevin Welsh, executive managing director at Newmark, in an interview with Invest:. “Industrial remains a leader, with sustained demand in high-barrier-to-entry locations, driving strong leasing and investment activity.”
Ever since the pandemic, the demand for warehouse space has not stopped, with 2021 being a record-breaking year for industrial construction nationwide with 163.7 million square feet of occupancy gains, leading to a total supply of 370.7 million square feet. New Jersey’s location close to major ports, international airports, key interstate highways, and the proximity to other major metro areas made the Garden State a blooming environment for logistics and distribution centers.
“As for opportunities, New Jersey’s geographical position makes it a prime location for warehouse and logistics spaces. Many residents enjoy next-day delivery services from companies like Amazon, which necessitate nearby warehouse space,” said Thomas Trautner, governance co-chair of the Urban Land Institute Northern New Jersey to Invest:.
By the end of 2024, New Jersey became the most expensive industrial market in the Northeast — and sixth nationally — with average rents rising 12.7% each year, up to $11.4 per square foot. During 4Q24, New Jersey added 3.25 million square feet of industrial space with an additional 5.5 million square feet in development. Despite this, vacancies climbed to 8.8%, one of the highest rates in the country, reflecting a broader national trend of warehouse supply outpacing demand.
Despite the increased vacancy in the state for warehouse spaces, construction for industrial projects remains in high demand in locations such as Orange County and Monmouth County. This demand is driven by industrial real estate firms looking to attract the attention of logistics companies with well located assets with good transportation access to roadways, ports and airports. For instance, Ridgecut Road’s I-84 Orange County Logistic Center in Montgomery will add more than 146,000 square feet of vacant industrial space to the Northeast Corridor from Philadelphia to Boston. On the other side, Crow Holdings’ The Millstone 8 Logistics Center in western Monmouth County completed construction back in 2021 and will soon be occupied by global firm Logistics Plus. If construction of industrial spaces continues with this ongoing pace, the logistics industry will stay behind in occupying these assets, leading to a growing vacancy rate.
“As warehouse construction increased, public sentiment shifted against it,” Trautner pointed out. “A form of ‘not in my backyard’ sentiment has developed in New Jersey. People want the convenience of rapid delivery but do not want warehouses near their homes.”
While warehouse growth has provided economic benefits, it has also sparked concerns in communities across New Jersey.
According to the Environmental Defense Fund, with over 3,000 warehouses covering 527 million square feet statewide, nearly one in three residents now lives within half a mile of a warehouse.
For more information, please visit:
