A CommercialEdge report says office vacancy rates in the nation’s central business districts continue to struggle as declining listing rates and high vacancy levels persist as the effects of the pandemic linger. The New Jersey office market, as well as the Northeast as a whole, appears to be doing better than the rest of the nation.
According to CommercialEdge’s latest U.S. office market report for April, CBD vacancy is currently at 19.2%, up 730 basis points from early 2020, as demand continues to shift toward suburban locales. New Jersey edged up slightly to 18.9% after an 80-basis-point annual increase.
All Northeastern markets were below the national office vacancy rate in April, with Manhattan recording the lowest rate in the region at 16.2%—a figure that continued to decline both year-over-year and month-over-month. Philadelphia posted a steeper rise of 320 basis points to 19.2%. Boston saw the sharpest shift in the region, with a 470-basis-point increase in vacancy to a 17% rate. This was likely tied to the construction boom seen during the pandemic coming from the high demand for life sciences space. This, however, has resulted in an oversupply, and, as of late 2024, availability for life sciences properties in Boston reached 26.9%, one of the highest in the nation.
The average U.S. office listing rate was $33.34 per square foot in April, rising 5.4% year-over-year despite weak demand and elevated vacancy (19.7%). At $33.45 per square foot, New Jersey stayed above the national average.
New Jersey had 1.05 million office space under construction in April, the 13th-highest of any market. Across the U.S., a total of $14.2 billion in office sales was recorded through April, with properties trading at an average of $191 per square foot. About $436 million in sales in New Jersey was recorded in April, 10th-highest among national markets.
Office construction pipelines continued to shrink across all major Northeastern markets in April. Boston remained the national leader in active development, with 5.5 million square feet underway, representing 2.1% of its stock. Philadelphia, on the other hand, experienced a significant year-over-year contraction, with its pipeline declining from 2.1 million square feet in April 2024 to just 1.2 million square feet last month.
