Industrial Vacancy Surges in New Jersey: A Sign of Market Imbalance?

Somerset County, NJ, is facing an industrial inflection point. By May 2025, the vacancy rate hit nearly 10%—a 10-year high—driven by oversupply and lagging demand, according to CoStar.

Supply Surged. Demand Didn’t.

From 2023 to 2024, new industrial space kept hitting the market, but tenants didn’t follow. Vacancy rose 440 basis points, even as deliveries accelerated.

In contrast, 2021 was a banner year: vacancy dropped to 4%, and 1.7 million SF was leased across 43 deals. Logistics firms like NFI Industries and Turtle & Hughes led major leases.

But by 2022, leasing slowed. Tenants downsized or paused expansions, pushing absorption into negative territory through 2024.

Mid-Sized Warehouses Vacancy Surges

Total available space reached 4 million SF. The hardest hit? 100k–250k SF warehouses, which make up 40% of current vacancies. Over a third were built after 2020.

Case in point: 110 Belmont Dr., a 152,000 SF Class A facility near I-287, has sat empty since completion in late 2024.

Small-Bay Warehouses Hold Strong

Smaller units remain tight. With little new supply under 100k SF, vacancy in this segment is just 15%. Demand is steady, thanks to flexibility and scarcity.

The Real Story: A Misalignment, Not a Meltdown

This isn’t a market crash—it’s a mismatch. Developers delivered big, fast. Tenants, meanwhile, got cautious and picky.

Success now depends on right-sizing, smart location, and fit-for-purpose design. In a segmented market, precision beats volume.