Buoyed by a flurry of new leasing by life sciences companies and law firms, the first quarter of 2019 got off to a good start with activity increasing by 38 percent over the same quarter a year earlier, and matching the fourth quarter of 2018.
That 1.5 million square feet of space leased represented the strongest first quarter the New Jersey office market has seen since 2014, according to CBRE’s Q1 2019 New Jersey office market report.
“[C]apital investment continues to drive rental growth and leasing activity,” said Adam Englander, senior vice president at CBRE. “Owners who have invested wisely are experiencing positive results from base building and amenity upgrades, as they capture improved leasing activity.”
Another bright spot was the availability rate, which has trended downward since 2016. The availability rate ended the first quarter at 20.1 percent, 30 basis points (bps) below the fourth quarter of 2018 and down 110 bps since the second quarter of last year.
Despite the strong leasing and declining availability rate, New Jersey’s office market posted 150,000 square feet of negative absorption. In fact, absorption was more than 430,000 square feet below foruth quarter 2018. In addition, after increasing for two consecutive quarters, the average asking lease rate fell by $0.24 per square foot, quarter-over-quarter, to $26.21, the same as the first quareter 2018.