PARSIPPANY, NJ—Measurable office sector improvement contributed to robust overall third-quarter performance for New Jersey commercial real estate, according to Colliers International NJ.
Office leasing dropped during the third quarter, to 2.2 million square feet, yet overall market fundamentals continued to improve – fueled largely by an increase in user-buyer transactions.
In fact, five office user-sales over 70,000 square feet closed, contributing to 393,000 square feet in occupancy gains and representing a significant portion of the market’s total of 889,599 square feet in positive net absorption over the past three months. Among these transactions, Barclays acquired The Crossings at Jefferson Park and PDI purchased 400 Chestnut Ridge Road in Woodcliff Lake.
“This dynamic pushed year-to-date net absorption in the black for the first time in 2017,” says Colliers’ John Obeid, senior director, Tri-State Suburban Research for Colliers. “At 20.2 percent, overall office availability improved 40 basis points quarter-over-quarter, reducing the total available space to 42.2 million square feet – the lowest total since year-end 2009.” As a result, average asking rents also showed improvement, rising $0.18 per square foot quarter-over-quarter, to $26.51 per square foot.
The Northern New Jersey office market continued to strengthen during the third quarter, with the availability rate improving by 90 basis points quarter-over-quarter to 20.9 percent. Eleven out of the 13 submarkets tracked registered stable or declining availabilities. Northern New Jersey office leasing totaled 1.2 million square feet, an increase of 18.0 percent from last quarter. The Newark and Parsippany submarkets led the activity, accounting for 28.5 percent of the total.
Five of eight Central New Jersey office submarkets recorded positive net absorption, with the 287 Corridor submarket seeing the most at 111,499 square feet. The Somerset/Route 78 submarket recorded 316,682 square feet of negative absorption, dampening what would otherwise have been sustained improvement for the region.
Central New Jersey office leasing totaled 983,611 square feet, with the Princeton submarket alone accounting for 30.8 percent of the activity. Notable regional leases included PNC Financial Service’s 88,914-square-foot renewal at 2 Tower Center in East Brunswick and Billtrust’s 88,759-square-foot lease at 1009 Lenox Drive in Lawrenceville.