The latest CBRE Marketview report, released Tuesday, indicates the New Jersey office market carried positive momentum forward from the second quarter and displayed improvements in key measures during the third quarter. Net absorption was a positive 581,000 square feet – 212,000 square feet greater than in Q2 2019, leaving net absorption just short of 800,000 square feet for the calendar year.
New Jersey office leasing picked up in Q3 2019, with 1.5 million square feet in total leasing.
Activity was up 245,000 square feet compared to Q2 2019, though it trailed the Q3 2018 total by 300,000 square feet. Northern and central New Jersey office leasing activity was evenly split in Q3 2019 at 752,000 square feet and 733,000 square feet respectively, with both markets showing improvement over the previous quarter.
Overall availability in northern and central New Jersey declined 575,000 square feet with a 345,000-square-foot drop in northern New Jersey and a 230,299-square-foot drop in central New Jersey. Most of the decline in northern New Jersey occurred in the Morristown and Parsippany submarkets where availability fell a combined 319,000 square feet. The Route 287/78 Interchange accounted for the largest decline in availability in central New Jersey with a drop of 368,000 square feet.
The largest sale during Q3 2019 was the $140,000,000 sale/leaseback transaction of Summit Medical Group’s headquarters at 1 Diamond Hill Road in Berkley Heights. The 270,000-square-foot six-building campus will retain Summit Medical Group as a tenant under a 20-year net lease agreement with the purchaser, Welltower REIT. The Toledo-based Welltower REIT has aggressively pursued medical office buildings this year citing rising cap rates as their attraction to this asset class.
Atlantic Health Systems, another large New Jersey health care provider, acquired 333 Mount Hope Road in Rockaway for $25.9 million. The 92,326-square-foot Class A medical office building has been fully occupied by Atlantic Health Systems since it opened in 2016.