Colliers, a publicly traded professional services and investment management company, said July 10 that resilient leasing demand and a slowdown in new supply additions produced a strong second quarter in the New Jersey office market.
The company said that despite fewer large transactions, leasing activity clocked in at 2.1 million square feet, a 6.3% increase from the same period a year ago. Colliers said “tenants across size segments continued to pursue modern, well-located, amenitized spaces.”
Colliers reported that only two spaces with 50,000 square feet and greater became available, compared with seven during the previous quarter. This resulted in an availability rate decline to 24.8% from 25.3%, the sharpest quarter-over-quarter decrease in nearly seven years.
Tenant activity at quality buildings, particularly among life-sciences and health-care companies, contributed to declining availability during the second quarter. Consumer healthcare company Haleon leased 78,635 square feet at Connell Corporate Center in Berkeley Heights, relocating its U.S. headquarters from Warren. Acadia Pharmaceuticals leased 52,771 square feet at 210 Carnegie Center in Princeton, doubling its previous footprint. Notable renewals included law firm Sills, Cummis & Gross recommitting to 71,157 square feet in Newark and options exchange operator MIAX renewing for 94,445 square feet in Princeton.
The market recorded 1.2 million square feet of positive net absorption during the second quarter after negative net absorption of 114,000 square feet in the first quarter. Absorption was positive in 14 out of the 21 submarkets. These included Princeton and Morristown, which combined for more than half a million square feet of occupancy gains.
The single largest new occupancy was Sanofi’s new 260,000-square-foot headquarters in downtown Morristown.
Asking rents continued to edge upward and average $31.26 per square foot from $31.10 in the first quarter. The average Class-A asking rent is $33.91 per square foot and has grown by 2.4% over the past year. Colliers said landlords “that have made significant capital investments in their buildings are generating the most leasing and seeing the highest levels of rent growth.”
Sublease availability slipped to 6.3 million square feet, its lowest level since the fourth quarter of 2020. This reduction was driven partly by Walmart’s sublease of 86,443 square feet at 221 River St. in Hoboken and Michael Baker International’s 39,653-square-foot sublease in Princeton.
