CAMDEN, NJ—The Southern New Jersey office market continued to turn in positive results and declining vacancy in the second quarter of 2017 as Burlington County hit its lowest vacancy rate on record, according to Cushman & Wakefield’s second-quarter Office Marketbeat report for the region. The commercial real estate services firm’s Philadelphia research team projects positive absorption for the rest of the year.
The Southern New Jersey office submarket’s overall vacancy rate ended the second quarter at 11 percent, down 70 basis points so far this year. Declining vacancy in both Camden and Burlington counties kept the submarket’s vacancy at its lowest point since 2003.
“While the two counties that comprise the 14.2 million-square-foot Southern New Jersey office market experienced combined negative absorption of 63,122 square feet in the second quarter, absorption remains positive for the year by 55,232 square feet. Vacancy declined in both Camden, to 13.4 percent, and Burlington, to 9.1 percent,” says Cushman & Wakefield research manager Jared Jacobs. “Overall vacancy in Burlington County ended the second quarter at the lowest level ever recorded for the county.”
Both counties are experiencing positive economic signs, enjoying their lowest unemployment rates since May of 2008. Unemployment dropped 90 basis points to 4.6 percent in Camden County during the second quarter and by 80 basis points to 3.7 percent at midyear in Burlington County.
Direct average asking rents for class A office space in the South Jersey submarket rose 7.6 percent from the end of 2016 to $26.03 per square foot. Overall leasing activity also remained strong in the first half of 2017 at 258,772 square feet, driven by robust activity in mid-sized leases.
Camden County experienced a year-over-year vacancy decline of 420 basis points to 13.4 percent. Overall year-to-year absorption totaled 68,185 square feet while leasing activity totaled 108,964 in the second quarter. The largest lease of the quarter took place in Camden County, where Virtua Health leased 30,000 square feet at 6991 North Park Drive in Pennsauken.
In Burlington County, where overall vacancy was down 150 basis points from a year ago to 9.1 percent at the end of the second quarter, Marshall, Dennehey, Warner, Coleman & Goggin leased a 44,078-square-foot office space at 15000 Midlantic Drive in Mount Laurel. Three of the four biggest leases were executed in Marlton: Abundant School Corporation leased 19,487 square feet at 2 Greentree Centre; Harbor Linens occupied 17,976 square feet at 4B Eves Drive, and Paychex moved into 14,307 square feet at 8000 Lincoln Drive.
Investors continued to demonstrate an appetite for Southern New Jersey office space, particularly in Camden County, where they have acquired 500,000 square feet of space so far this year. Crown Properties purchased three class A office buildings in Cherry Hill from Brandywine Realty Trust for $19 million. The buildings totaling 215,600 square feet are located at 200, 210 and 220 Lake Drive East. ABS Management & Development Corporation paid $18.4 million to Hudson Financial to acquire the 208,613-square-foot building at 401 White Horse Road in Voorhees.
The Cushman & Wakefield researchers predict the Southern New Jersey office market will continue to turn in positive performance for the remainder of 2017. They anticipate the market will absorb more than 73,000 square feet of office space by year end, continuing to put downward pressure on vacancy rates.