The southern New Jersey and Southeastern Pennsylvania commercial real estate markets will have to wait a bit longer for the post-pandemic recovery, according to a third-quarter report from WCRE.
The reason is hardly a surprise: the Delta variant.
While the sector seemed to rebound along with the broader economy earlier this year, the Delta variant of COVID-19 caused havoc in recent months. The emergence of the Delta variant and breakthrough infections pushed the return to office date back from Labor Day to the first quarter of 2022.
WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in southern New Jersey and the Philadelphia region.
WCRE founder and Managing Principal Jason Wolf said the effects of this shift have reverberated throughout the economy, including the office and retail markets.
“A few months ago, CRE performance was trending in a positive direction and seemed poised for a return to pre-pandemic levels,” Wolf said.
“While we are in a very positive investment transaction market, the Delta variant has put the office and retail markets into a holding pattern, but a comeback should still be on the horizon.”
In the third quarter, there were approximately 225,717 square feet of new leases and renewals executed in the three counties surveyed (Burlington, Camden and Gloucester), a bit below the previous quarter.
New tenant leases comprised approximately 119,213 square feet, or about 53% of all deals for the three counties.
Other office market highlights from the report:
- Overall vacancy in the market is now approximately 12.75%, an improvement of 0.85 of a point from the previous quarter;
- The sales market maintained momentum, with 1,200,393 square feet actively on the market or under agreement;
- There were $70,164,500 in completed sales comprising 709,032 square feet during Q3;
- Average rents for Class A & B product remain unchanged, as they continue to show strong support in the range of $10-$15 per square foot or $20-$25 per square foot gross for the deals completed during the quarter. These averages have hovered near this range for more than a year.
WCRE also reports on the Southern New Jersey retail market. Highlights from the retail section of the report include:
- The Consumer Confidence Index declined steadily throughout the third quarter after posting five consecutive months of increases;
- Retail vacancy in Camden County posted a huge improvement of more than 3 points, to 10.7%, while average rents fell more than $1, in the range of $11.81 per square foot triple net leased;
- Burlington County retail vacancy improved more than a point, to 8.3%. But it is still above 7.6%, where it stood a year ago. Average rents dropped to the range of $13.93 per square foot NNN;
- Gloucester County posted a decrease of 2 points, to 14.5%, after increasing throughout last year, with average rents virtually unchanged in the range of $14.04 per square foot NNN.