The beginning of the year will be especially challenging for operators in the Garden State, as more than 70% of all completions are scheduled to come online during the first half, says Michael Fasano, regional director of the New Jersey office.

Despite the inventory growth and slackening demand, the report indicates there will be some pockets of strength, such as Northern New Jersey's Waterfront submarket. Tenants including law firms, insurance companies and boutique investment firms will target the area due to its more affordable rents than neighboring Manhattan.

Elsewhere, fundamentals will continue to be resilient in Princeton, where a concentration of service-oriented businesses and the university's medical center buoy demand for space. In Somerset County, as much as 25% of the vacant square footage on the market this year will be discounted sublease space, driving down rents for most properties.