Page 16 - RE-NJ

SPONSORED CONTENT
From Boardrooms To Bedrooms (And Big Boxes)
Inside New Jersey’s offi ce conversion boom
By Jeffrey L. Heller, SIOR
Principal and Executive Director
Avison Young
Introduction
Empty offi ce buildings and half-vacant corporate campuses have
become a familiar sight in New Jersey. In the wake of the pandemic,
and the rise of remote and hybrid work, companies are using less
space and leaving behind millions of square feet of surplus offi ces.
At the same time, there’s a pressing need for housing and modern
industrial facilities. It’s no surprise then that developers in the Garden
State are increasingly turning these underused offi ces into multifamily
residences and warehouses. This white paper explores the scale and
characteristics of New Jersey’s offi ce conversion boom focusing on
the transformation of offi ces into residential and industrial uses as
well as the impact it will have on developers, investors and occupiers.
New Jersey has seen a dramatic shift in its offi ce market
fundamentals overall. Offi ce vacancy rates are approximately 17
percent in northern and central New Jersey as tenants consolidate
and relocate to highly amenitized buildings with fi nancially stable
owners. Statewide, elevated vacancies have pushed owners
to reposition obsolete properties, often by demolition and
redevelopment into alternative uses. In fact, over the past fi ve years
New Jersey has demolished or redeveloped more offi ce space
than it has built new, leading to a net decline in offi ce inventory
by 9.6 percent. This refl ects a broader national trend: Since the
mid-1990s, it is
estimated that more
than 150 million
square feet of U.S.
offi ces have been
converted to other
uses, with activity
peaking in the last
few years. The
following sections
delve into New
Jersey’s conversion projects in detail, using the latest data on
redevelopment projects across the state.
The scale of offi ce redevelopment in New Jersey
New Jersey’s offi ce conversion pipeline is substantial. According to
Jordan Katz, Market Intelligence Analyst, there are 141 identifi ed
offi ce conversion projects across the state that have been completed,
are under construction or are proposed as of August 2025. Of these,
109 projects have either fi nished conversion or are actively under
construction, while another 32 are in proposal stages. To put this in
perspective, roughly 22.1 million square feet (msf) of former offi ce
space is being removed from the market to make way for new uses.
This 22.1 msf represents 9.6 percent of the total offi ce inventory.
Moreover, the pace of conversions has accelerated sharply in the
past few years. For much of the late 2010s, New Jersey saw only a
handful of offi ce redevelopments per year. However, as remote work
patterns solidifi ed post-pandemic, the trend kicked into high gear.
By 2022, there was an explosion of conversion projects initiated,
and this increased activity has continued through 2025. The count of
redevelopments spiked in 2022, indicating a post-pandemic surge. The
year 2022 saw 35 offi ce properties begin conversion by demolition or
construction start, dwarfi ng prior years. While 2023 showed a slight dip
All charts prepared by Avison Young 2025
from that peak, it still far exceeded pre-2020 levels. Currently, there
are at least 27 projects under construction, with more slated for the
near future. This recent
wave confi rms that
repurposing offi ce assets
was not an anomaly but
an ongoing movement
in the state’s real estate
market. Developers
increasingly recognize
that many aging offi ces
will never return to full
occupancy and are
opting to transform them into properties that meet today’s demands.
What offi ces are being converted into
When an offi ce building can no longer attract tenants, what should
it become instead? In New Jersey, the clear preference has been
residential or industrial reuse. These two categories account for the
vast majority of conversions:
1. Multifamily residential: By far the largest single category,
49 percent of all tracked projects are converting offi ces into
apartments (often upscale rentals). Developers are seizing
the opportunity to address housing demand by creating new
multifamily communities on well-located offi ce sites.
2. Industrial/logistics: The second major category, about 30
percent of projects, involves conversions to industrial use —
typically modern warehouses and distribution centers that serve the
booming ecommerce and logistics sector.
Together, these two uses make up roughly four out of fi ve offi ce
conversions in New Jersey. The remaining projects are split among
other uses such as hospitality (hotels), self-storage facilities, medical
or life science centers, educational facilities and a few unique
projects (for example, one former offi ce site became a specialty
sports training complex for the New York Red Bulls).
This breakdown underscores that the demand for “bedrooms and
big boxes” are the top priorities driving offi ce redevelopment.
New Jersey has a housing affordability crunch and is also a prime
location for distribution facilities based upon the access to the Port
of New York and New Jersey, which serves the whole tristate region
and roughly 40 percent of the U.S. population within a 500-mile
radius, or one day’s drive by tractor-trailer.
Where conversion projects are happening
Offi ce-to-residential and industrial projects are not evenly
spread throughout New Jersey — they tend to cluster in certain
counties and submarkets. Northern New Jersey, especially Morris
and Bergen counties, leads the state in these redevelopments.
Parsippany leads the way with 29 of the state’s 141 projects.
Morris County, with 47 projects, has the highest concentration
among counties and exactly one-third of all identifi ed conversion
projects, followed by Bergen (26) and Essex (20). These three
northern counties account for 65.9 percent of all conversions.
This is consistent with the large number of offi ce parks in Morris
County that have struggled with vacancy — many along the I-80
and I-287 corridors. It’s also refl ected in unit counts: Roughly one-