Cushman & Wakefied reported third-quarter office leasing activity in Northern and Central New Jersey topped 2 million square feet, pushing year-to-date volume to 6.2 million square feet – 8.1 percent ahead of last year’s pace.
The commercial real estate services firm on Friday released its latest market research findings, which indicate a steady market heading into the final months of the year.
“Strong suburban tenant demand across the state countered some major blocks of space coming online as new vacancies,” noted Jason Price, Cushman & Wakefield’s director of suburban tri-state research. “As a result, after hitting a recent vacancy low of 17.1 percent at mid-year, the rate ticked just slightly higher to 17.2 percent.”
Price noted that a handful of Central New Jersey submarkets have experienced notable increases in vacancy since mid-year, including Monmouth County, the Interstate 78 Corridor and the Upper 287 Corridor.
As such, the region saw 461,561 square feet of occupancy losses and a vacancy rate increase of 90 basis points (to 16.4 percent). In contrast, Northern New Jersey space absorption totaled more than 507,000 square feet, and the vacancy rate fell 40 basis points to a seven-year low of 17.9 percent.
During the third quarter, a handful of market segments experienced notably robust activity. The Interstate 78 Corridor, Parsippany, Morristown, Bergen County, and Princeton/Route 1 all saw at least 200,000 square feet of leasing. Conversely, demand was tempered in some market segments as the Hudson Waterfront and Woodbridge/Edison experienced a slight lull, according to the Cushman & Wakefield findings.
Although minimally, New Jersey’s overall average asking rental rate continued to trend higher during the third quarter. The current $29.68 per square foot average, representing a 1.4 percent year-over-year rise, has been driven largely by an increase in Class A asking rents. Quarter-over-quarter, Northern New Jersey Class A rates climbed $0.05 to $36.28 per square foot, while Central New Jersey posted a $0.02 decline to rest at $29.30 per square foot.
“The trend of upgraded, amenitized office buildings achieving higher occupancies and stronger demand will continue as companies attempt to retain and lure new employees in the current strong job market,” Judd said. “This, combined with the expected positive state economic trending, is keeping landlords of Class A assets bullish – we may see them further raise asking rents in some cases.”
For the remainder of 2019, Cushman & Wakefield anticipates occupancy to remain steady, with no substantial vacancies projected to come online until early 2020.