Driven by a series of small and midsized transactions, first-quarter leasing velocity in the northern and central New Jersey office market reached its highest mark in five quarters, according to a new report by Colliers International.
The brokerage firm’s New Jersey office found that leasing velocity — the total number of leases completed — grew about 20 percent from last quarter, said Matt Dolly, senior managing director at the Parsippany-based branch. The number of first-quarter deals also grew nearly 50 percent from the first quarter of 2011.
“It’s a positive sign that deals are getting done,” said Dolly, who heads Colliers’ research and analytics group in New Jersey. “Small and midsized deals are important, too.”
The figure was noteworthy in an otherwise static market, Dolly said. The firm’s report found overall vacancy reached 20.4 percent in the first quarter, which represented almost no change from last quarter or the first quarter of 2011. Vacancy rates in those quarters were 20.3 percent and 20 percent, respectively.
Dolly said the market will likely not see any dramatic activity until next year, after the dust has settled from the presidential election in November. But this year’s first three months showed plenty of 10,000- to 50,000-square-foot transactions.
That could mean conditions are improving for landlords, prompting tenants to realize that now is the time to upgrade their space and lock in longer-term leases, he said. For landlords, any deals to help raise occupancy can enhance their ability to refinance the property at lower rates.
“In order to do that you want to have a higher occupancy level, and I think that’s where the tenant comes in,” Dolly said. “So it’s sort of a win-win for both in some cases, without really giving the farm away in the concessions.”
Colliers’ report also noted that tenants are taking less space when they upgrade. It said companies are more likely to only consider their immediate needs when picking a space, rather than trying to account for future expansion as in the past.