Office vacancy rates in Northern and Central New Jersey, driven by recent corporate relocations within the state, such as those by Bank of America and Samsung, along with diminished leasing activity, rose in the first quarter, according to a report from JLL.
The vacancy rate edged up to 27% in Northern and Central New Jersey, after falling to 26.6% by year-end as the rate declined throughout the second half of 2024.
The higher vacancy rate was boosted by nearly 929,800 square feet of negative net absorption, the largest volume of negative absorption since the second quarter of 2023. More than 80% of the negative absorption during the first quarter was focused in the Class-A office market, where the overall vacancy rate increased 40 basis points from year-end 2024 to 30.8%.
Availabilities generated by corporate relocations were a leading factor behind the higher vacancy rate. After subleasing nearly 321,210 square feet from Unilever at 700 Sylvan Ave. in Englewood Cliffs during the third quarter of last year, Samsung Electronics’ former 233,505-square-foot North American headquarters at 85 Challenger Road in Ridgefield Park was being marketed for lease in early 2025.
Also, 328,970 square feet is being vacated by Bank of America at 101 Hudson St. in Jersey City, after the financial services institution signed a 550,000-square-foot renewal and expansion at 525 Washington Blvd. in Jersey City last year.
Leasing velocity was also restrained in early 2025, as less than 1.9 million square feet of deals were completed in the Northern and Central New Jersey office market. This was a 20% decline from the same period a year ago. Nearly 60% of first-quarter leases were in the 10,000-25,000-square-foot range, as larger sized transactions were difficult to come by.
