Office leasing gained ground in the second quarter, generating 2.8 million square feet of activity, according to Colliers, a 13.8% increase over the three-year pre-pandemic quarterly average. Meanwhile, at 22.2%, the overall availability rate in the sector was down slightly from the first quarter of 2022 and year over year.
North – 1,173,730
Central – 1,649,040
Overall – 2,822,770
North – 23.0%
Central – 21.0%
Overall – 22.2%
North – $30.94
Central – $26.67
Overall – $29.32
In its New Jersey Office Market Snapshot for the second quarter of 2022, Colliers said that drop in availability – just the second dip since COVID hit – came thanks to larger transactions. And a number of those larger transactions came through in the life sciences space.
According to Colliers Research Manager Felix Soto, the life sciences industry was the No. 1 driver of leasing activity last quarter. Fueling that industry momentum – and helping to carve out a 28% share of activity – in an email to NJBIZ Soto cited two transactions: Cellares’ new lease for 118,208 square feet of space at 95 Corporate Drive in Bridgewater and PTC Therapeutics’ relocation to Somerset County.
The PTC deal is the largest identified in Colliers’ report. A joint venture of Rubenstein Partners LP and Vision Real Estate Partners announced the long-term lease in June, under which the pharmaceutical company will occupy a new, more than 360,000-square-foot facility at the Warren Corporate Campus. The new headquarters – PTC is currently based in South Plainfield – will span two full buildings and is set include offices, collaboration and conference spaces, and research laboratories.
When the deal was announced, PTC Therapeutics Vice President of Global Facilities Doug McLeester said the facility coming to 400 and 500 Warren Corporate Drive in Warren was the “ideal space for our expected future expansion in New Jersey, a foundational and growing market for biotech in the U.S.” Lending further insight into why the company – and others like it – are moving in and around the Garden State, McLeester said the new space “allows us to have a Class A facility for our growing team, while keeping the new flexible work paradigm in mind. As PTC grows into one of the world’s leading rare disease companies, our in-house capabilities must similarly grow and adapt.”
According to Colliers, new leases like those signed by Cellares and PTC drove demand in the office sector, while renewals accounted for 19.2% of all lease transactions. The largest renewal, for 57,405 square feet at 111 Wood Ave. S. in Iselin, was for a manufacturer that serves the life sciences industry, Ansell Healthcare Products.
Other notable life sciences lease transactions identified by Colliers from Q2 include:
As for where life sciences companies are seeking to locate, Soto noted that “demand continues to be strong in Central New Jersey,” adding that “the industry is helping revive underused office buildings.”
Colliers’ report also identified an appetite for recently built-out “plug-and-play” space, amid high and rising construction costs, as a trend that carried over from the first quarter of the year. An examples highlighted by the firm was biopharmaceutical company Aadi Bioscience’s subleasing 10,615 square feet of space at 2 Speedwell Ave. in Morristown.
While it was good news for life sciences and though there was improvement in the office market overall in Q2 – net absorption was positive again for the second time in three quarters at 601,774 square feet – Colliers’ report highlighted the return of larger concentrations of space to the supply, particularly in North Jersey, as stalling further positive momentum. Rents did tick up, as well, to $29.32 per-square-foot—a 1.4% increase year over year. Colliers attributed the increase to upward repricing in recently updated buildings in transit-oriented submarkets.
Looking ahead, Soto said that Colliers “expect[s] Life Sciences to continue to be a driver in the state for the foreseeable future as there are still plenty of tenants out in the market.”e