Avison Young on Thursday released its Fourth Quarter 2021 Office Market Insights Report for New Jersey, revealing that, while quarterly deal volume has increased by 3.6% since 2020, post-COVID leasing activity slowed by 43.5% compared with the prior 20-year historical average.
“Fourth-quarter leasing activity in the New Jersey market slowed to 1.8 million square feet, which can be attributed to the emergence of the Omicron variant stalling many occupiers’ real estate decisions,” said Jeffrey Heller, principal and managing director of Avison Young’s New Jersey office.
Heller said that, as a result of the weaker demand for office space, there was a decrease in base rents by 4.8% from 2019, and he sees these tenant-favorable market conditions likely to persist until more companies return to the office or begin embracing hub-and-spoke strategies.
AY’s report also showed the total fourth-quarter availability rate was at its highest since 2005, totaling 18.6%. Sublease availability continued to drag aggregate market fundamentals, accounting for 9 million square feet of available space and 17.2% of total availability.
“Stagnant rents and high vacancies in the New Jersey office market, coupled with the record-breaking rents in the industrial sector and high demand for multifamily has prompted many office owners to consider redevelopment, which is a trend that is poised to continue throughout 2022,” said Parker Nusim, a data analyst at Avison Young who specializes in the New Jersey market. “In terms of office market recovery, transit-oriented cities such as Summit, Jersey City and Hoboken have the strongest potential to capture greater leasing traction and higher rents in the months ahead.”
To download Avison Young’s Fourth Quarter 2021 Office Market Insights Report for New Jersey, click here.