Despite growing economic uncertainty, year-to-date office leasing activity of 5.6 million square feet in northern and central New Jersey was 41% higher when compared with the same time last year, according to CBRE’s Q4 2022 New Jersey Office Figures report, released Monday.
Despite this, the northern and central New Jersey office markets saw leasing activity of 1.24 million square feet during the quarter, a figure 7% behind the five-year quarterly average and down 6% from Q3 2022. As a result, the market’s availability rate of 24% was up 110 basis points from the previous quarter, but down 40 bps from the same time in 2021. Total absorption for northern and central New Jersey during Q4 was negative 1.68 million square feet, but the yearly total remained positive, with 1.23 million square feet. Average asking rent closed the year at $30.82 per square feet, up 10% from year-end 2021.
“While economic uncertainty and concern over a recession continue to be on the front burner, New Jersey’s office market showed signs of a real recovery in 2022 as leasing improved significantly from a lackluster 2021,” Remy deVarenne, senior vice president, CBRE, said. “Although there are headwinds ahead, there will continue to be user demand in the stronger markets in New Jersey.”
Northern New Jersey picked up the mantel for highest leasing activity during Q4, after central New Jersey led activity for the two consecutive quarters. North Jersey recorded 1.02 million square feet of leasing activity during the quarter, which accounted for 83% of the quarterly total and 17% above its five-year quarterly average. The two largest leases in the market included a 250,000-square-foot sublease at 5 Giralda Farms in Madison and a 92,000-square-foot commitment at 100 Park Ave. in Florham Park. In contrast, Central Jersey ported 221,000 square feet in total leasing, 53% below its five-year quarterly average.
Partially due to the higher quality office space available for lease, average asking rents in northern and central New Jersey are up 2% quarter-over-quarter and are 10% higher than Q4 2021. Northern New Jersey recorded an average rent of $32.12 per square foot, up 2% quarter-over-quarter and 11% year-over-year. Central New Jersey’s average asking rent ended Q4 at $27.92 per square foot, up 5% year-over-year.
On the investment sales front, most of the quarter presented a challenging environment. While total investment sales volume for office properties fell 6% quarter-over-quarter to $546 million, sales for the entire year increased by 21%, to $3.1 billion. The largest sale competed in Q4 was 101 Hudson St. in Jersey City, a 1.3 million-square-foot Class A office tower that was approximately 70% leased. The property was sold for $346 million by Veris Residential to Birch Group.