Property development in New Jersey is attracting a wide variety of industries to the office market, according to Transwestern Commercial Services‘ Third Quarter 2019 Office Market Report.
The real estate firm, which has an office in Florham Park, found in its report that redevelopment is one of the top drivers of growth in the state, with vacancy decreasing 10 basis points in five the past six quarters.
Occupancy levels increased for the six straight quarter, with positive third quarter absorption of 1.3 million square feet seen in 12 of the state’s 21 submarkets (Bergen Central, Morristown, Newark/Essex Urban, Princeton and Wayne/Paterson).
“With its highly skilled workforce, New Jersey’s office market continues to attract and retain tenants in various industries across the state,” Jim Postell, principal, TCS, said. “As landlords continue to revamp their properties, with private investors pumping capital into aging assets, we’re seeing the creation of suburban Class A offices with the environments needed for an exceptional employee experience.”
The largest deals in Q3 took place in the suburbs, including Everest Reinsurance’s 315,000-square-foot lease at the Warren Corporate Center; CIT Industries’ 215,318-square-foot lease at 340 Mount Kemble Ave. in Morristown; and PTC Therapeutics’ 185,000-square-foot lease at the Bristol-Myers Squibb campus in Princeton.
Average rents increased by 58 cents over the past two quarters to $27.44 per-square-foot — the largest increase since the second half of 2015 and an all-time high for the state. In 16 of the 21 submarkets, there were higher year-over-year rents, with five of them increasing by more than 5%.
“Following a quarter where smaller leases dominated the landscape, third quarter saw multiple large deals spread across different sectors, illustrating that the New Jersey suburbs remain a highly desirable place to do business,” Matthew Dolly, New Jersey research director at TCS, said. “While growing at a moderate pace, slow and steady growth may mean the market is better prepared for a potential slowdown, compared to previous periods of prosperity that resulted in overbuilding and overexposure to weakening economic conditions.”