WCRE Q1 2020 report: Year began high in South Jersey, then COVID-19 created chaos

In the first quarter of 2020, WCRE analyzed South Jersey’s commercial real estate and found it continued in its years-long strong performance at the start of the new decade. However, by March it was clear that, just as every other aspect of life was hit by COVID-19, the CRE market would be negatively impacted as well.

The report still showed positive indicators, since the effects of the crisis began taking hold in the last weeks of the first quarter. Vacancy rates across every property type remained low and rent increases remained positive, but slow. Even before the pandemic hit, there were hints the decade-long expansion was slowing, although at a solid pace.

“Initially the assumption was that the worst of the coronavirus outbreak would directly impact the regions in Asia where it first was identified, and that the impact to the U.S. would come in the form of disruption of supply chains and slower economic growth abroad,” Jason Wolf, founder and managing principal, WCRE, said. “While those shocks have happened, the rapid spread of the virus within the US and around the world has impacted the global economy, and those effects are still becoming apparent throughout our local and regional CRE markets.”

In the three counties surveyed (Burlington, Camden and Gloucester) there was 374,429 square feet of new leases and renewals, up more than 80% over the previous quarter. New leasing activity accounted for 47% of all deals in the three counties. Overall, gross leasing absorption was in the range of 110,000 square feet, up 25% over Q4. The sales market remained active, with 1.02 million square feet on the market or under agreement. Completed sales were about 10% over last quarter, at 866,444 square feet in trades.

Other highlights from the report:

  • Overall office vacancy is now 11.2%;
  • Office vacancy in Camden County dropped to 11.6%;
  • Office vacancy in Burlington County dropped to 10.8%;
  • Retail vacancy in Camden County rose to 6.2% from 6% in Q4 while average rents rose to $17.27 per-square-foot;
  • Retail vacancy in Burlington County rose to 8% with average rents of $12.23 per-square-foot;
  • Retail vacancy in Gloucester County rose to 12.7% from 11.7%, with average rents around $13.71 per-square-foot.