CBRE has released a pair of real estate reports covering the office and industrial sectors in the second quarter of the year.
Office market
In Q2, the northern and central New Jersey office market totaled 831,000 square feet of leasing activity, CBRE said. That came in at 31% below the five-year average and 45% less than in Q2 2023.
There was not a single office lease topping 100,000 square feet for the entire quarter. Class A leasing dropped to 76% of all lease activity in the quarter, as well, after topping 82% in nine of the last 10 quarters.
On the bright side, top-tier buildings — which represent only 9% of inventory — remain 340 basis points lower, at 21.5% availability.
Overall, negative absorption of 621,000 square feet pushed availability up 40 basis points, to 24.9%. That continues a trend of six straight quarters in which availability has remained within 50 basis points of the all-time high 25% mark.
Other data:
- Asking rent in Q2 came in at $31.55 per square foot, also stable over the past six quarters;
- Sublease space grew in the quarter, reversing a four-quarter decline, at 19% of total available space.
Industrial market
The industrial market in northern and central New Jersey saw very different results, with a growth rate that reversed Q1’s slight decline.
Overall, 5.9 million square feet were leased, up 16% for the quarter.
Strong demand by smaller tenants—particularly third-party logistics firms—led the way, accounting for 47% of the market’s total leasing activity and pushing the absorption rate to 1.7 million square feet.
Occupancy increased for the first time since Q1 2023, although 2 million square feet of new product pushed the vacancy rate 10 basis points higher, to 5%. That represented the slowest increase in vacancy since Q2 of 2023, however.
Other data:
- Subleasing reached its highest level since Q3 2020, at 6.5 million square feet;
- Average asking rent was stable for Class A space, at $19.40 per square foot, while Class B and Class C properties saw an increase of 3%, to $16.62 per square foot.
