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The basics:

• Leasing activity reached 13.1M sq. ft. in Q1, up 10% from pandemic-era quarterly peaks
• Amazon leading resurgence in big-box industrial space
• Class A industrial properties continue to attract tenants; Class B/C vacancy increasing
• Construction remains near multiyear lows

The tide is turning for industrial real estate.

As large occupiers return, construction constraints and shrinking supply are driving down vacancy in the New Jersey market. Meanwhile, financing is available and long-term fundamentals illuminate bright spots on the local scene.

In its first quarter report released in April, JLL noted 13.1 million square feet in leasing activity — a 10% increase from average quarterly sector peaks during the pandemic.

In the present, who is leasing space, though, continues to evolve.

While offshore third-party logistics users have seen a drop, recognizable and companies with strong credit are exhibiting an appetite for space.

According to JLL, name-brand tenants drove demand in Q1. The firm said strong-credit companies accounted for more than 3 million square feet of leases at new Class A assets over 100,000 square feet. The activity is more than double last year’s activity.

Big box activity

A resurgence in the big box market has emerged as a growing trend in 2026.

“Amazon has kind of been leading the charge with five or six active requirements in New Jersey alone since the beginning of the year,” said Greek Real Estate Partners Managing Partner David Greek.

That follows a drop in deep tenant demand for larger format spaces over the last two years, particularly in North Jersey, he said.

On top of that interest, Greek noted the overall number of tenants in the market is slightly higher, versus this time last year.

Plus, as folks have gotten more comfortable with uncertainty, it’s proven impetus to act. “Since we’ve been in this … environment for such a long time now, there’s definitely some companies that are just saying … we’ve kicked the can long enough. And I expect that’s going to pick up even more dramatically the second half of the year,” Greek said.

By the numbers

– SOURCE: JLL

And assuming this environment persists, anticipate a slower edging back into the market to follow. “Where it’s more like companies forcing themselves to invest in their future rather than it being kind of a no brainer on the underwriting, on the balance sheet,” Greek said.

While the big box tenants went on hiatus, Chinese third-party logistics deals helped plug the hole in the market, according to Rob Kossar, vice chairman and head of JLL’s Northeast Industrial Region. Now, “they’re going through the same evolution that domestic 3PLs did.”

Offshore 3PLs still represent a significant amount of demand, accounting for 27.6% of new Class A leasing in Q1. However, that figure marks a drop from more than 40% over the past two years.

“The Chinese 3PL and Chinese e-commerce market has not softened,” he explained. “It’s changed. They’re taking more spaces that are smaller as they’re getting closer to the customer.”

You gotta have class

When it comes to what kind of space users are looking for, a flight to quality persists in New Jersey industrial. JLL reported that of the 10.1 million square feet leased in Q1, Class A space accounted for more than 6 million square feet of that activity.

Kossar says amid an earnest flight to quality in New Jersey, companies are leaving Class B and C spaces to consolidate into one large, Class A building.

Over the past nine months, JLL reported Class A vacancy has dropped 300 basis points (to 11.6%). At the same time, the Class B/C segment has seen vacancy gone up 40 basis points (to 4.1%).

Kossar attributes that push to a more educated customer. As supply-chain acumen has become more integral in the modern world, the benefits of a modern building can create efficiencies that outweigh higher rents.

He broke it down to the throughput – how fast you can get product in and out of the building, a big deal in e-commerce as well as B2C; and storage capacity. He described some of the differentiators that distinguish Class A from its B/C counterparts, such as 40-foot clear ceilings. An adequate number of loading doors, ample trailer parking, and better loading configurations are also crucial.

Due to the strong leasing momentum, JLL said many landlords are holding on rent expectations. Reflecting respective demand, Class A asking rents remained flat while Class B/C rents dropped 2.5% year over year.

“The new buildings, the rent may be more,” Kossar noted, “But actually the cost of occupying and other cost of doing business is lower.”

Building blocks

Demand is rising while construction remains near multiyear lows. According to JLL, 6.72 million square feet of industrial space were under construction in the first quarter of the year. The current activity marks lows not seen since 2019. JLL said the figure comes in at nearly 23% below historical averages.

On the capital side, Greek said the biggest hurdle to getting shovels in the ground at the moment is a lack of availability in spec industrial capital. “And in this region, that is how we build industrial,” he added. For the debt side, the exact opposite, “Kind of knocking down our doors trying to lend us money.”

Of course, in New Jersey, entitlement and permitting challenges persist. Nonetheless, there’s an appetite to build. JLL reported it expects land acquisitions to rise thanks to the current, limited pipeline, bringing upward pressure on pricing.

“Now, not only is there a desire to do industrial development … but all the developers have turned their switch on and they’re looking to add supply,” Kossar said.

Despite a barrage of uncertainty and risk from geopolitical headwinds, JLL said the current trajectory could see vacancy drop toward 5.5% to close out 2026.

Under pressure

On the horizon, a constrained construction pipeline will put pressure on big-box users. Amid the segment’s rising demand, JLL reported just one vacancy over 900,000 square feet across the North and Central Jersey markets.

Greek said there’s a lot of confidence that tailwinds will continue to drive industrial growth.

“There’s a bit of a structural catch up that keeps this area in demand even when the overall market is a little bit softer, but also along with that, I think that the broad view across the institutional investment world is similar to … why I’m taking a big bet on it myself.”

There’s a bit of a structural catch up that keeps this area in demand even when the overall market is a little bit softer …
– David Greek, managing partner, Greek Real Estate Partners

Looking toward buildings ranging from 75,000 square feet to 250,000 square feet, JLL predicts the smaller formats will benefit from reduced construction. Following a surge in production, the company reported 55.3% of spaces within those footprints delivered since 2023 remain available.

Consumer spending and confidence can offer indicators of industrial performance. Greek also cautioned against short-termism, tying sector success to longevity. “So, for those that can kind of tolerate short term volatility of the real estate cycle, my thought right now: this is a great year to buy industrial real estate is great year to build industrial real estate,” Greek said.

“They say investment, there’s blood in the streets, right? I mean, now is the time. It’s not pretty out there, but it’s all the fundamentals are shaping up to hopefully create a strong market for the next three to four years.”