New Jersey showed the first signs of a recovery with office leasing activity totaling 714,000 square feet during the second quarter, according to CBRE’s Q2 2021 New Jersey Office MarketView.
While the market is still being impacted by the lingering effects of the pandemic, this uptick in leasing activity is 14% higher from 2021’s first quarter and 78% higher than the low point of the pandemic in Q2 2020. This figure is, however, still 55% below the five-year quarterly average.
Another bright spot during the second quarter was the modest improvement in space absorption. North and Central Jersey posted negative net absorption of 1.2 million square feet, the second consecutive quarterly improvement. However, the negative net absorption resulted in an increase of New Jersey’s availability rate to 24.3%, the sixth consecutive quarterly increase.
The top leases during Q2 2021 included several new commitments and large renewals by technology and life sciences companies. Atlantic Health System renewed its 505,359-square-foot lease at 435, 465 and 475 South St. in Morristown; the General Services Administration renewed its 243,996-square-foot at 11 Center St. in Newark; and Internet Brands inked a 105,117-square-foot lease at 2 Gateway Center in Newark.
“New Jersey’s office market is beginning to come out of the doldrums as businesses are reopening and vaccinations continue,” said CBRE Executive Vice President Ed DaCosta. “Leasing activity has picked up and the outlook is promising for the remainder of the year as more companies are once again making decisions on their future real estate requirements.”
New Jersey’s overall average asking rent of $27.43 per square foot remained unchanged over the previous quarter. Northern New Jersey posted an asking rent of $28.03 per square foot, while Central Jersey’s average asking rent was $26.47 per square foot.
On the investment sales front, the market continued its upward trajectory posting $727.4 million in sales—69% higher than the previous quarter. The average price per square foot of $170 for office properties sold jumped 31% from Q1 2021.
The largest transaction during the quarter was the $255 million sale of Mack-Cali’s 843,000-square foot Short Hills portfolio acquired by The Birch Group.