CBRE

FIGURESNORTHERN&CENTRALNEWJERSEylQ42025

AnnualLeasingActivityFallstoAll-TimeLowwhileInvestmentsalesGainsMomentum

800K

LeasingActivity

0.48M

NetAbsorption

241%

AvailabilityRate

$31.77

AverageAskingRent

Note:Arrowsindicatechangefrompreviousquarter.

QUICKFACTS

-

belowthefive-yearquarterlyaverage.

-

--to-

-

bpsannually.

-

sq.ft.

-

-

millionsq.ft.ofsubleasespace,or15%ofallavailablespace.

Marketoverview

Leasingactivityremainedsubduedforthesecondconsecutivequarter,totaling798,000sq.ft.inQ4up14%fromQ3butstill31%belowthefiveyearquarterlyaverage.Apronouncedslowdowninthe

secondhalfoftheyearweighedheavilyonannualresults.Fullyear2025leasingreached3.67millionsq.ft.,26%below2024's4.93millionsq.ft.and47%belowthe2015-2019average.Thismarksthelowest

annualleasingtotalonrecord,8%belowtheprevioustroughof3.97millionsq.ft.in2021.

Thepullbackwasdrivenprimarilybyasharpdeclineinlargeblocktransactions.onlytwonewleasesof100,000sq.ft.orlargerwerecompletedin2025,comparedwithsevensuchdealsin2024.Beyond

macropressuresincludingasofteninglabormarketanduncertaintyfromtariffsoccupiersalsofacedashrinkingsupplyofhighquality,marketreadyspace.Inflationofthecostofcapitalandconstructionhashamperedlandlords'abilitytobuildturnkeyspaces,fundtenantimprovementallowancesorinvestinassetrepositioning,renderingseveralbuildingseffectivelynoncompetitive.Thelackofcompelling

qualityorviableoptionsfortenantrelocationshavecontributedtostallingtheflowofnewleasing.onamacrofront,NewJerseyhasalsosufferedjustlikemanysuburbanlocationsasdemandnationallyhasshiftedfocusmoreonurbancitiesandawayfromsuburbanmarkets.Asavailablequalityspace

tightened,tenantsincreasinglyoptedtorenew.Renewalstotaled2.40millionsq.ft.fortheyear,representing40%ofallleasingvelocityupfrom33%in2024and27%in2023.

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

2CBRERESEARCH?2026CBRE,INC.

Despitemuteddemand,theoverallavailabilityrateedgeddown20bpsyearoveryearto24.1%,

thelowestlevelsinceQ42022.primeassetsaccountedformostofthisimprovement,postinga190bpsannualdeclineto18.4%.Askingrentsinprimebuildingsaveraged$41.72persq.ft.,a

31%premiumoverthemarketwideaverageof$31.77persq.ft.

Limitedofficedemandacceleratedtherepurposingofobsoleteinventory.In2025,4.4millionsq.ft.ofofficeproductwasslatedfordemolitionorconversionan88%increasefromthe2.8

millionsq.ft.identifiedin2024andthehighestannualfiguresince2022's6.0millionsq.ft.Totalremovalssince2019nowstandat22.3millionsq.ft.Basedonprojectsalreadyinplanningor

underway,asmuchasthreemillionsq.ft.couldberemovedfromthestatisticalinventoryin2026,representingroughly2%ofthe2025totalofficeinventory.

Economicoverview

Theu.s.economyissendingsomemixedsignals.Financialmarketsarefocusedontheupside,particularlyAI'ssizablecontributiontogrowthinrecentquarters.someindicatorsofbusinessactivity,suchascapitalgoodsorders,areimproving,andstrengtheningcreditmarketsare

helpingtousherrealestateintoanewcycle.conversely,consumerconfidenceremainsweak,withspendingreportedlydrivenbyasmallersegmentofaffluenthouseholds.AnnualaverageGDpgrowthwillbesteadyin2026,at2%.Akeycatalystisasofterlabormarket,ascompaniesare'slowtohire,slowtofire'atrendthatislikelytolastafewquarters.

NewJersey'slabormarketroseby23,900positionsquarter-over-quarterinQ3(+0.5%)andwasup15,500positionsyear-ove「-year(+0.6%).office-usingemployment(OUE)performedbetterthanthestateasawholeinQ3.whilethefinancialactivitiessectorshrankby400positions(-

0.1%)andinformationservicescontractedby700positions(1.0%),professionalandbusinessservicessawpayrollincreaseby12,100positionsquarter-over-quarterinQ3(+1.7%).yearoveryear,OUEinNewJerseyisupanetof16,800jobs(+1.9%).NewJersey'SOUEpeakedat1.07millionpositionsinJuly2022andcurrentlystandsat99.0%ofthatlevel.

NewJersey'soverallunemploymentis5.2%,upfrom4.9%intheendofQ2.Thenationalunemploymentrateis4.6%asofNovember2025.

FIGURE1:NewJerseyofficeusingEmployment(Thousands)

officeusingEmployment

FIGURE2:HistoricalAvailabilityandAskingRent

AvailabilityAvg.AskingRent

source:BLS

source:CBREResearch,Q42025

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

3CBRERESEARCH?2026CBRE,INC.

LeasingActivity

officeleasingactivityacrossNorthernandcentralNewJerseyincreased14%thisquarterto798,000sq.ft.inQ4.Despitethequarterlyuptick,annualleasingdeclined26%to3.67millionsq,.ft.thelowestfullyeartotalonrecordandthethirdstraightannualcontraction.overthesamethreeyearperiod,thefiveyearquarterlyleasingaveragehasfallen13.4%,droppingfrom1.34millionsq.ft.to1.16millionsq.ft.

Asteeppullbackinlarge-blockactivitywasakeycontributortotheslowdown.Aftertwo

consecutivequarterswithnonewleasesof100,000sq.ft.orgreater,selectiveInsuranceGroupbrokethestreakwitha123,000sq.ft.leaseat103JohnF.kennedyparkwayinshortHills.still,thiswasonlythesecondlargeleasecompletedin2025downsharplyfromsevensuch

transactionsin2024andsixin2023.

Leasinginprimeassetsthemarket'shighest-qualitybuildingsshowedrelativestrength.

Thesepropertiesrecorded561,000sq.ft.ofactivity,a17%increasefromthe478,000sq.ft.

completedin2024.primeassetsaccountedfor15%ofallnewleasingin2025,upfrom10%lastyear,underscoringacontinuedflight-to-qualityamongoccupiers,asarisingnumberof

landlordsfacefinancialconstraints.

Renewalactivitytotaled419,000sq.ft.forthequarteran89%dropfromQ3bringingthe

annualtotalto2.40millionsq.ft.whilethisrepresentsamodest3%year-over-yeardecline,

renewalsmadeup40%ofall2025leasingactivity.Thishasbeenthehighestsharesince2021,whenrenewalsaccountedfor46%ofannualvelocity.Asthequalityofavailablespacecontinuestoerode,renewalsareexpectedtocompriseanincreasingshareofleasingvelocitygoing

forward.Despiterenewalscomprisingofagreatershareofleasingvelocity,overallleasingvelocitywasalsoatanannuallowat6.10millionsq.ft.

NorthernNewJerseyposted599,000sq.ft.ofactivityinQ4,a39%increasefromQ3butstill

18%belowitsfive-yearquarterlyaverage.ThewaterfrontsubmarketledNorthernandcentral

Jerseywith207,000sq.ft.ofleasingup192%quarter-overquarterand31%aboveitsfive-yearaverage.JPMorgan's85,000sq.ft.expansionat545washingtonBoulevardinJerseycitywasNorthernJersey'slargestdealofthequarter.Forthefullyear,thewaterfrontalsoledNorthernandcentralNewJerseywith529,000sq.ft.oftotalleasing.

FIGURE3:TOPLeaseTransactions,Q42025

selectiveInsuranceGroup103JohnF.kennedyparkway123,000Lease

confidentialFinancialTenant

545washingtonBoulevard

84,782Lease

sandoz

777scuddersMillRoad-Bldg.Il

78,301Lease

chelseapiersFitness

130Baystreet

51,112Lease

Medidatasolutions

194woodAvenuesouth

50,648Renewal

FIGURE4:officeLeasingActivity(Millionsq.Ft.)

LeasingActivity(SF)

source:CBREResearch,Q42025

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

4CBRERESEARCH?2026CBRE,INC.

centralNewJerseyregistereditssecondconsecutivequarterlydecline,recording199,000sq.

ft.ofactivityinQ4,a26%reductionfromQ3.Theprincetonsubmarketdominatedcentral

Jerseyleasingwith118,000sq.ft.,drivenlargelybysandoz's78,000sq.ft.commitmentat777scuddersMillRoadinplainsboro.

NetAbsorptionandAvailability

Absorptionturnedpositivein2025afterthemarketposted482,000sq.ft.ofnetgainsinQ4,reversingthenegativetrajectoryseenearlierintheyear.Thisimprovementhelpedpushtheoverallavailabilityratedown20bpsyear-overyearto24.1%.Akeydriverbehindthepositiveabsorptionhasbeenthesharpslowdowninnewsubleaseadditions.Duringthesecondhalfoftheyear,only275,000sq.ft.ofgrossadditionswereaddedtothesubleasemarketa69%

reductionfromthe870,000sq.ft.duringthesameperiodin2024.Asaresult,totalsubleaseavailabilitydeclined22%year-over-yearto5.45millionsq.ft.,nowrepresenting15%ofall

availablespaceandmarkingthelowestlevelsinceQ22020.

Twoadditionalfactorsofficeinventoryreductionsandtheresilienceofprimeassets—also

contributedtotighteningmarketconditions.In2025,4.4millionsq.ft.wasdesignatedfor

conversion,repurposing,ordemolition,bringingtotalremovalssince2019to22.3millionsq.ft.,or14%ofthe2019inventorybase.primeassetsaccountedfor15%ofallannualleasingactivityandendedtheyearwithanavailabilityrateof18.4%,a190bpsdeclinefrom2024.Thisrateisalso570bpsbelowtheoverallmarket,underscoringbifurcationbetweentop-tierproductandtherestoftheinventory.Notably,asprimeavailabilityremainsrelativelyconstrained,overall

leasingvelocityhasalsomoderated.

positiveabsorptionextendedacrossmostoftheregion,with15of20submarketsrecording

decliningavailabilityin2025.TheparsippanysubmarketledNorthernandcentralNewJerseywith636,000sq.ft.ofpositiveabsorption,bringingitsavailabilityratedown460bps

year-over-yearto24.2%thelowestpointsinceQ22011(23.9%).Thisimprovementwas

supportedby366,000sq.ft.ofannualleasingactivityanda55%year-over-yearreductioninavailablesubleasespace.

FIGURE5:NetAbsorption(Millionsq.Ft.)

source:CBREResearch,Q42025

FIGURE6:AvailabilityRate(%)

Q3

2023

Q2

2024

Q3

2024

Q4Q1

20242025

Q2

2025

Q3

2025

Q4

2025

Q4

20232024

source:CBREResearch,Q42025

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

5CBRERESEARCH?2026CBRE,INC.

RentTrends

TheQ42025averageaskingrentfortheNorthernandcentralNewJerseyofficemarketwas

flatquarterove「quarterat$31.77persq.ft.butup1%annually.classArentwasalsoflat,

finishingthequarterat$34.63persq.ft.,a9%premiumabovetheoverallmarket.TheaverageaskingrentforNorthernJerseycameinat$33.59,up1%annually,whilecentralJersey'saskingrentwasflatfortheyearat$28.74.

Forthequarter,onlysixofthe20submarketssawanincreaseinaverageaskingrent.The

biggestchangewastheparsippanysubmarketwitha2%quarterlyincreasefollowingthe

additionofhigherpricedspaceonwaterviewBlvdandlowerpricedspaceonRoute10being

leased.Thisisthesecondquarterinarowwhentheparsippanysubmarkethashadthe

market'sbiggestquarterlyincreaseinaskingrent.Fortheyear,theaverageaskingratefortheparsippanysubmarketjumped4%.Fortheyear,onlytheparkwaycorridorandcentralBergensubmarketshaveseengreaterannualincreaseswith8%and5%increases,respectively.

Investmentsales

InvestmentsalesactivityinNorthernandcentralNewJerseygainedmomentuminQ42025,

withtransactionvolumereaching$180milliona102%increaseoverthe$89millionrecordedinQ3.Thequarterwasledbythe$33milliontradeof14sylvanwayinparsippany,aclassAofficepropertyacquiredbysignatureAcquisitions.

onanannualbasis,investmentsalestotaled$507million,a4%increaseyearove「-year.

owner-useractivityplayedanotableroleinthemarket.GellertGlobalacquired2GiraldaFarmsinMadisonforanundisclosedprice,while100kimballDriveinparsippanysoldtoan

owner-userfor$6.14million.Thisfollowsthetrendobservedearlierintheyear,highlightedbysunpharma'sacquisitionof750collegeRoadEastinplainsboro.Afterregisteringlessthanfiveowneruserpurchasesin2023,morethan15owneruserpurchasesweretransactedin2024and2025.Thetrendislikelytopersistasseveralownerswithchallengedfinancialsituationsmay

produceappealingoptionsforuserbuyers.

Despitetheuptickininvestmentsalesfortheyear,2025wasstillsignificantlybelowthe$1.95billionand$3.1billionwesawin2021and2020,respectively.withFederalReserveratecut

expectedinQ12026andmultipleobsoleteofficebuildingspositiontobesoldandrepurposed,theinvestmentlandscapecouldimprovein2026aspricingexpectationsstilllooktonormalize.

FIGURE7:AverageAskingRents($/persq.Ft.)

34

24

22

32

Q32023Q42023Q12024Q22024Q32024Q42024Q12025Q22025Q32025Q42025

FIGURE8:NotablesalesTransactions

AverageAskingLeaseRate

14sylvanway

203,506

$33.00

$162

signatureAcquisitions

560crossst

6,126

$15.08

$2,461560cross15LLC

3ExecutiveDr

85,765

$14.89

$173ldilExecutiveDriveLLC

200princetonscorporatecenter

153,639

$9.00

$59HiltonRealty

100princetons

113,730

$9.00

$79HiltonRealty

source:CBREResearch,Q42025

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

6CBRERESEARCH?2026CBRE,INC.

FIGURE19:Q32025submarketstatistics

orange/Rockland

palisades

Montvale/woodcliffLakeRoute17corridor

centralBergen

Route23/paterson/waynewaterfront

Meadowlands

Newark

suburbanEssex/EasternMorrisparsippany

Morristown

westernl-80corridor

chatham/Millburn/shortHillsNorthernNewJerseyTotalparkwaycorridor

Route287/78InterchangewesternRoute78

Route287/piscataway/BrunswicksGreaterMonmouthcounty

princeton

centralNewJerseyTotal

NewJerseyTotal

2.554.913.222.665.77

5.51

4,6312.94

13.64

92,44

9.43

19.84

2.43

4,75

15.44

58.68

151.12

34.7%

20.7%

24.9%

3.5%

16.5%

15.2%

31.6%

25.4%

21.0%

26.2%

24.2%

23.0%

35.0%

19.0%

24,0%

22.0%

24.3%

60.6%

18.7%

18.6%

24.6%

24。4%

24。1%

$22.32

$27.49

$29.65

$21.48

$28.65

$22.59$44.74$29.41

$32.41$26.09

$28.18$32.01$24.69

$44.07$33.59

$35.62$28.51

$25.34

$21.86

$27.01

$29.13

$28.74

$31.77

9,289

15,68512,808

25,347

30,654

207,048

7,389

10,915

101,823

30,20117,404

123,000

598,65124,559

31,759

O

25,003

199,310

5,776o

19,358

25,18114,382

71,43220,00039,229

2,550

17,136

o

225,215

135,510

4,784

6,922

30,107

193,520

418,735

(41,641)(6,358)

9,0470

22,058

98,143

286,874(2,277)

134,990(1,566)

240,714

9,148

132,394

(26,374)

(420,954) o(9,238)

(1,436)

60,038(397,964)

481,646

23,87717,45815,984

27,238

248,366

27,052(81,355)

103,952

80,683

635,859

174,342

18,482

1,475,310 (37,074)(1,092,197)

(142,506)

21,452

(1,153,154)

322,156

source:CBREResearch,Q42025

FIGURES|NORTHERNANDCENTRALNEWJERSEYOFFICE|Q42025

MarketAreaoverview

DEFINITIONS

Availability:spacethatisbeingactivelymarketedandisavailablefortenantbuild-outwithin12

months.Includesspaceavailableforsubleaseaswellasspaceinbuildingsunderconstruction

AskingRent:weightedaverageaskingrent

LeasingActivity:Totalamountofsq.ft.leasedwithinaspecifiedperiodoftime,includingpre-leasingandpurchasesofspaceforoccupancy,excludingrenewals

Leasingvelocity:Totalamountofsq.ft.leasedwithinaspecifiedperiodoftime,includingpre-leasingandpurchasesofspaceforoccupancy,includingrenewals

NetAbsorption:Thechangeintheamountofcommittedsq.ft.withinaspecifiedperiodoftime,asmeasuredbythechangeinavailablesq.ft.

TakingRent:Actual,initialbaserentinaleaseagreementT.I.:TenantImprovements

vacancy:unoccupiedspaceavailableforlease

surveycriteria:CBRE'smarketreportanalyzesfullymodernizedofficebuildingsthattotal75,000+sq.ft.inNNJandcNJmarketsincludingowneroccupiedbuildings.

contacts

Michaelslattery

FieldResearchDirector

+1