To be fair, the New Jersey office market still is being impacted by the work-from-home movement created by the COVID-19 pandemic.
But there are signs of a recovery.
According to CBRE’s 2021 New Jersey Office MarketView for Q2, office showed a bit of an upswing, with leasing totaling 714,000 square feet. This uptick in leasing activity is 14% higher from the first quarter of 2021 and 78% higher than the low point of the pandemic in the second quarter of 2020.
Another bright spot during the second quarter was the modest improvement in space absorption.
North and Central Jersey posted negative net absorption of 1.2 million square feet, the second consecutive quarterly improvement, the report said. However, the negative net absorption resulted in an increase of New Jersey’s availability rate to 24.3%, the sixth consecutive quarterly increase.
The top leases during Q2 2021 included several new commitments and large renewals by technology and life sciences companies:
- Atlantic Health System renewed its 505,359-square-foot lease at 435, 465 and 475 South St. in Morristown;
- The General Services Administration renewed its 243,996-square-foot lease at 11 Center St. in Newark;
- Internet Brands inked a 105,117-square-foot lease at 2 Gateway Center in Newark.
CBRE Executive Vice President Ed DaCosta said it is the makings of a trend.
“New Jersey’s office market is beginning to come out of the doldrums as businesses are reopening and vaccinations continue,” he said. “Leasing activity has picked up and the outlook is promising for the remainder of the year as more companies are once again making decisions on their future real estate requirements.”
New Jersey’s overall average asking rent of $27.43 per square foot remained unchanged over the previous quarter. Northern New Jersey posted an asking rent of $28.03 per square foot, while Central Jersey’s average asking rent was $26.47 per square foot.
On the investment sales front, the market continued its upward trajectory, posting $727.4 million in sales — 69% higher than the previous quarter. The average price per square foot of $170 for office properties sold jumped 31% from Q1 2021. The largest transaction during the quarter was the $255 million sale of Mack-Cali Realty Corp.’s 843,000-square-foot Short Hills portfolio acquired by the Birch Group.
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