The office market in New Jersey declined dramatically in the second quarter of 2020 as a result of COVID-19 related lockdown orders, according to CBRE‘s Q2 2020 Office Marketview report.
The report showed that leasing activity fell 72%, or 930,000 square feet, to 352,000 square feet year-over-year and was 79% below the five-year quarterly average even with 530,100 square feet of renewal activity (a 15% increase from Q1). Activity also decreased by 71% from Q2 2019.
However, despite the steep decline in leasing, average asking rents were up slightly to $27.15 per-square-foot, breaking the $27 mark for the first time since tracking began.
Net absorption was negative for the second quarter in a row, ending Q2 2020 at -1.1 million square feet, most likely due to the uptick of furnished, ready-to-occupy sublease space coming to market.
The availability rate rose (76 basis points) for the second consecutive quarter to 20.34%, marking the first time the rate has been above 20% since Q1 2020.
Those who use an office in New Jersey fell by 118,000 positions, or 11.7%. The state has since recovered 4,400 of those roles, or 3.7%.
“The COVID-19 pandemic triggered economic uncertainty, which resulted in a steep decline in leasing activity in New Jersey,” Ed DaCosta, executive vice president, CBRE, said. “Most tenants have taken a ‘wait-and-see’ approach and avoided making real estate decisions, though there was a modest increase in short-term renewals.”