Tenant trends bring big moves to Office Buildings list

Jessica Perry//October 24, 2022

Tenant trends bring big moves to Office Buildings list

Jessica Perry//October 24, 2022

Leasing in the Northern and Central New Jersey office markets topped 1 million square feet for the fourth consecutive quarter in Q3, according to CBRE, marking the first time since the pandemic that it’s trended that way for so long. And despite the fact that activity was slower in the third quarter over the prior period, the firm reported that year-to-date leasing was up 101% from 2022.  

That shift in occupied space is reflected in some of the most significant changes on the 2022 NJBIZ Office Buildings list (NJBIZ, Oct. 24, page 14). 

Ranked by rentable building area, UNICOM Science and Technology Park I in Whitehouse Station was able to jump five spots from No. 10 in 2021 to No. 5 in 2022 without modifying its RBA, which was 992,467 square feet for both years. The ascension on the annual ranking comes as employers continue to seek quality spaces to entice and engage pandemic-weary workers and to accommodate evolving hybrid work arrangements, with leased space at other prominent properties dropping those buildings out of the top 25. 

Colliers reported that new availabilities did offset demand in Q3, with net absorption negative by 114,707 square feet, bringing availability up by 10 basis points to 21.9%, still down from 22.8% a year prior. However, the firm highlighted several submarkets that bucked that trend, recording notable gains.  

3 Second St. at Harborside in Jersey City features an outdoor patio along the Hudson River.
Harborside 3 in Jersey City fell off of the NJBIZ 2022 Office Buildings list from its 2021 position at No. 13. – CUSHMAN & WAKEFIELD

The largest lease of the quarter, as noted by Colliers and CBRE, was AT&T’s move in the East I-78 submarket. That caused the company’s previous base – the AT&T Building in Bedminster – to climb from No. 15 on the 2021 Office Buildings list to No. 8 on this year’s ranking. The telecommunications company is exiting 1 AT&T Blvd. in the Somerset County municipality for 230,000 square feet of space at nearby 1405/1425 Route 206, also located in Bedminster. Reflecting the desire for quality among office tenants – according to Collier’s New Jersey Office Market Snapshot for the third quarter of 2022, 76% of leasing volume went to Class A buildings – that property underwent a $48 million renovation in 2017.  

The deal contributed to the 1.2 million square feet of leasing activity that’s occurred in the East I-78 submarket year-to-date — outpacing each of the previous six years, according to Colliers. 

The Morristown and Monmouth submarkets also recorded notable gains in Q3. In Holmdel, Bell Works – where The Garibaldi Group LLC handles leasing – secured more than 50,000 square feet in recent leases at the Class A offering from Inspired by Somerset Development, with Vonage and LT Apparel signing on at the metroburb’s 72,000-square-foot flexible workspace Campus. That was enough to take Bell Works out of the top 25 on the 2022 Office Buildings list altogether; in 2021 it ranked at No. 3. 

As expectations are rising for the quality of and amenities offered by office space, so, too, are rents. CBRE’s Q3 2022 Northern and Central New Jersey Figures report said rents were up quarter over quarter in 11 of its 20 submarkets. In the Waterfront submarket, asking rents were up 1% quarter over quarter – and 4% annually – to $43.79-per-square-foot. However, the region, which is comprised of mostly Class A assets, is still attracting tenants. 

Before announcing it entered a $420 million agreement to sell Harborside 1, 2 and 3 in Jersey City, Veris Residential Inc. secured a 130,000-square-foot lease with Collector’s Holdings at Harborside 3 in February — representing the most office space leased in the Hudson County municipality by a tenant since September 2020, according to the firm. The agreement was enough to bump the property located at 210 Hudson St. off of the 2022 Office Buildings list from its 2021 position at No. 13.  

55 Corporate Drive in Bridgewater serves as the North American headquarters for Sanofi. -
55 Corporate Drive in Bridgewater serves as the North American headquarters for Sanofi.

Also falling from the list in 2022, 101 Hudson St. (No. 6 in 2021) in Jersey City. Veris recently closed the $346 million sale of that property to The Birch Group. 

Climbing 16 spots from No. 32, 55 Corporate Drive in Bridgewater came in at No. 16 on the 2022 list. The approximately 675,000-square-foot North American headquarters for Sanofi was sold earlier this year for $260.65 million. At the time, CBRE – which procured the buyer and represented the seller in the transaction – said it was the largest single tenant deal the state had recorded since 2016.

In addition to those that fell off, a number of buildings accordingly made big jumps up the ranks, landing themselves in the top 25 on the 2022 Office Buildings list. Bristol-Myers Squibb Campus in Lawrenceville climbed the farthest: 31 spots from No. 48 to No. 17.  

Gateway One in Newark makes a showing on the 2022 list with the second-highest ascension, moving 25 spots from No. 50 to No. 25. Gateway 2 also made a move — from No. 22 on the 2021 list to No. 12 on the 2022 list. Connected via covered walkways, and under the same ownership now since 2018 along with Gateway One and 4, the Brick City’s Gateway Center has seen extensive updates in recent years, including its dramatic, new entrance on Raymond Boulevard, which could serve as a draw for prospective tenants — and has already attracted some big names. 

Prudential Plaza Building at 751 Broad St. in Newark took the third-largest steps on the list, from No. 39 to No. 11.