By Jon Moore, Woodmont Properties

The New Jersey–Eastern Pennsylvania corridor is set for solid expansion in 2026, driven by steady economic growth, population influx, and a dominant logistics network. Forecasts indicate persistent demand for housing and warehouse space, with supply constraints keeping vacancies low and rents on an upward trajectory.

Economic & Demographic Foundations

Regional GDP growth is projected between 2-3%, outpacing many national average forecasts due to thriving healthcare, advanced manufacturing, and financial service sectors. Demographic trends support this optimism: the region added 230,000 households between 2022 and 2025—primarily young professionals and dual-income families seeking a balance between urban proximity and suburban affordability. New York City’s lack of affordability and fluctuating social legislative policies creates NJ demand. With unemployment hovering around 4%, consumer confidence remains a primary driver of rental demand. We should keep an eye on young professionals impacted by AI’s commercial adoption.

Multifamily: Demand Outpaces Supply

The multifamily sector remains tight, with net absorption forecast at 24,200 units and average rents climbing 3% to $2,560. Vacancy is expected to dip to 5.0%—a five-year low—while core-plus cap rates compress into the 4.5% range.

Two primary forces define this market:

• Transit-Oriented Development (TOD): The operational “Gateway Revitalization” plan has fueled development around Newark, Hoboken, and the extended PATCO line. Developers are concentrating nearly half of new starts within a half-mile of rail stations to capture premiums for walkability.

• Policy & Incentives: While state policies limit volume in high-impact zones to protect open space, new “Workforce-Housing” bonds and tax credits offset a third of construction costs for mid-scale projects. Fourth round COAH requirements have driven a rush of supply, but demand should meet or exceed the same. This attracts institutional capital to the Lehigh Valley and New Jersey, addressing a critical need for the region’s expanding middle class and affordable housing (lowercase ‘a’) which apartments provide relative to for-sale housing. Keep an eye on municipal budgets and real estate taxes; PILOTs are important to make projects pencil.

Industrial: A Logistics Powerhouse

Industrial real estate remains a premier asset class. Deliveries are expected to reach 20.5 million square feet, yet vacancy will slip to 4.4% as average asking rents rise north of $15 psf.

Regional infrastructure investments (totaling $2-3 billion) along I-95, I-78, and I-81 have sharpened last-mile connectivity. Demand for “last-mile” parcels (30–50k s/f) is expected to rise 9%.

Capital & Financing

Lending is back with tighter spreads, and equity is coming back to development after a few years given 2021-2023 cost inflation and national supply concerns. Benchmark rates remain stable, with the Fed easing around the edges. Institutional investors are prioritizing the region given its high barrier to entry status, earmarking 60-70% of new capital for industrial assets and multifamily assets.

Strategic Takeaways

To capitalize on these fundamentals, stakeholders should:

• Focus on TOD and suburban apartments: Prioritize multifamily projects near rail hubs or suburban locations given remote workers and the impending full self-driving cars (no more stressful commutes from the burbs).

• Target Logistics Corridors: Secure industrial parcels with direct access to I-95/I-81, Rt. 78 or the Port of Newark-Elizabeth.

In summary, 2026 offers a favorable risk-adjusted return environment. Steady job growth and strategic infrastructure will keep vacancy low and rents rising for savvy investors in the NJ-PA corridor.

Jon Moore is CIO at Woodmont Properties, overseeing investments, capital markets, and growth strategies, bringing 30+ years of real estate development leadership experience.