New Jersey’s life sciences market closed the year on a high note despite some headwinds. During the fourth quarter of 2022, New Jersey posted a vacancy rate for lab/research & development space of just 7.4%, a drop from 8.1% in Q3, according to CBRE’s Q4 2022 Life Sciences report. The vacancy rate is poised to decline further due to strong demand amid a dearth of new quality supply.
New Jersey continued to experience robust activity in 2022, resulting in positive net absorption of 97,692 square feet. Just 400,000 square feet of suburban Class A lab/R&D space is currently available, with six major tenants seeking space in the market and no significant new construction underway. Average asking rents in New Jersey’s metro area reached $32 per square foot in Q4 2022, a $4 increase from the previous quarter.
Among the largest lease transactions in New Jersey during Q4 were Ascendia’s 60,000-square-foot lease in North Brunswick; Porton USA’s 15,500-square-foot renewal in Cranbury; and Doehler’s 11,600-square-foot commitment in North Brunswick. In addition, Thor Equities welcomed its first laboratory tenant at 95 Green St. in Jersey City after the completion of a comprehensive adaptive reuse project.
Average vacancy, including space listed for sublease, across the 13 largest U.S. life sciences markets rose to 5.7% in the fourth quarter from 5.1% in the third, but it stayed even with the year-ago figure and below pre-2021 levels. Average asking rent rates increased nationally to a record $62.16 per square-foot per year in the fourth quarter, likely due to new, high-end lab space coming online in many markets. Lab space under construction grew to 40.3 million square feet in the fourth quarter, up roughly 8% from the third quarter. Meanwhile, demand for space declined by 8.4% to 18.5 million square feet.