Reopening efforts and higher vaccination rates continue to drive New Jersey’s economic recovery, according to Avison Young’s Second Quarter 2021 Office Market Report for New Jersey, released July 6. As of the end of June, 54.9% of the state’s population was fully vaccinated while unemployment rates rebounded from a high of 16.6% in May 2020 to 6.9%.
“Although leasing activity slowed significantly during the pandemic, New Jersey’s office market is poised for recovery as the state’s vaccination rate continues to surpass national averages, restrictions loosen and more companies begin welcoming employees back to the workplace,” said Jeff Heller, principal and managing director of Avison Young’s New Jersey office, in a prepared statement. “Property inquiries are also starting to pick up and while companies are still taking a wait-and-see approach, we anticipate this will translate to more deal volume throughout the year when workers are back in the office and companies have better understanding of their real estate needs.”
Base rents in New Jersey dipped by a mere 1.8% since the start of the pandemic and only 0.4% since the end of 2020, much less than the levels witnessed during the Financial Crisis and the Great Recession.
“New Jersey’s labor force participation hovered at 62.5%, rising 60 basis points since September 2020 during its pandemic low,” added Jason Bloom, a Northeast insight analyst based in Avison Young’s New Jersey office. “We will be closely monitoring the labor participation rate during September 2021 as in-person classes resume and enhanced federal unemployment is scheduled to expire, which we believe will lead to more adults returning to the workforce.”
The report also found that sublease space in the New Jersey market rose 65.9% since the end of 2019. Of the nearly 780,000 square feet under construction throughout the state, 60.1% is being built for medical use. After an initial slowdown in the second quarter of 2020, sales volume stabilized in New Jersey throughout the rest of 2020 and into 2021 with this year’s sales on pace to reach the 10-year average.