There were six office leases larger than 100,000 square feet that propelled North and Central Jersey’s office market in the second quarter, according to Cushman & Wakefield.
“Large transactions have returned to the New Jersey office market, boosting new leasing activity to its best quarter in almost two years,” said Andrew Judd, Cushman & Wakefield’s New Jersey market leader. “As a result, net absorption finished in the black, and vacancy ticked lower overall.”
The three largest second-quarter office deals included Integra Life Sciences leasing 166,791 square feet in Princeton; JPMorgan Chase leasing 148,000 square feet in Jersey City; and Mars Wrigley leasing 148,460 square feet in Newark.
In total, office leasing was more than 2.5 million square feet in the second quarter, almost doubling its figure from the first quarter and bringing 2018’s year-to-date total to 3.8 million square feet.
“Demand remained diverse throughout the state as usual, but life sciences, technology, insurance, manufacturing and finance led the way this quarter,” Judd said. “Additionally, activity was spread throughout key submarkets, with Bergen County, the Hudson Waterfront, Princeton/Route 1, Woodbridge/Edison, Newark, and the I-78 Corridor all experiencing substantial leasing volume.”
The plethora of leases helped push the state’s office vacancy rate in the second quarter lower by 20 basis points, to 18.4 percent, Cushman & Wakefield said. Vacancy rates were more pronounced in Central Jersey, which experienced a 70 basis-point decrease, while North Jersey stayed flat.
Office asking rents trend higher, Cushman & Wakefield said, with the average rental rate increasing by 51 cents in the second quarter to $29.27 per-square-foot. In North Jersey, rents have hit a high of $30.79 per-square-foot. For Class A statewide, rents have also hit a high with an increase of 5.6 percent year-over-year to $33.54 per-square-foot.
“With dwindling sublease space, landlords are increasingly confident in the current marketplace,” said Jason Price, director of Cushman & Wakefield’s tri-state suburbs research. “Sustained demand momentum and higher-priced Class A blocks on the market in prime areas are further contributing to the pricing uptick.”
“Amenity-rich, upgraded assets will outperform the balance of the marketplace as companies attempt to attract and retain employees in the current tight labor market,” Price said.