The COVID-19 pandemic has pushed many of the state’s businesses into work from home scenarios since March, according to Savills‘ Northern New Jersey Market in Minutes Q2 2020 report, but lately they’re welcoming back employees as New Jersey starts to reopen.
Although the difficulties of social distancing have put a strain on certain submarkets, like the Waterfront, the overall market is better positioned to bring back workers. As a result, select submarkets, specifically Morris and suburban Essex County, could be considered alternatives to Manhattan tenants looking to relocate and redistribute their workforces.
Despite COVID-19 restrictions, leasing activity in the second quarter dipped slightly from 1.5 million square feet in the first quarter to 1.3 million square feet. The Urban Essex submarket took up more than 18% of overall leasing activity, led by McCarter & English‘s 117,300-square-foot extension in Newark.
“Despite the statewide lockdown, leasing activity only slightly dipped from last quarter recording a healthy 1.3 million square feet of leasing, thanks in large to late-stage deals crossing the finish line” Danny Mangru, research director for the Tri-State region at Savills, said. “With many companies considering the New Jersey market as an alternative to Manhattan, specifically area’s such as the Waterfront and Morris, demand could see an uptick in the coming quarters.”
The market’s overall and Class A asking rents were both down by 0.8% in Q2 to $28.87 per-square-foot and $29.99 per-square-foot, respectively. The Waterfront submarket experienced the biggest drop in rents, with asking rates down by 2.5%.
The availability rate hit its highest figure since Q4 2018, up 20 basis points to 23.8%. The West Bergen submarket had the largest quarterly increase with the addition of 209,000 square feet of direct space, resulting in an availably rate of 25.2%, up 290 basis points.
Other key figures from the report:
- 56.1% of major transactions were renewals;
- 28.4% of large transactions occurred in the Urban Essex submarket;
- Energy sector tenants represented 23.3% of major transactions.