A spike in demand during the normally slow summer months fueled unexpected momentum in the South Jersey office market, according to a new third-quarter report from an area brokerage firm.
The company, Voorhees-based Wolf Commercial Real Estate, found vacancy in the region fell to 17 percent, down about two percentage points from the second quarter. The decline was driven by nearly 443,200 square feet of leasing activity in a 17.5 million-square-foot market that includes Burlington, Camden and Gloucester counties.
The third-quarter leasing volume is up nearly 50 percent from the same period last year, and more than half of that activity came from new deals, the firm said in its report.
"Instead of a summer slowdown we found many signs that optimism and confidence have returned," said Jason Wolf, the firm's founder and principal, in a prepared statement. He pointed to several large lease deals, a slight improvement in New Jersey's unemployment rate and last month's widely supported overhaul of state incentive programs.
The amount of total occupied space in South Jersey rose by 148,000 square feet during the quarter, the report said. Much of activity was driven by large deals in industries such as billing, consulting, management services and insurance.
The largest deal recorded in Wolf's report was Destination Maternity's 74,000-square-foot lease in Moorestown. Last month, the Philadelphia-based retailer was awarded a $40 million tax credit by the state to bring 620 jobs to New Jersey.
Wolf noted there "are still no signs of significant office construction," but that could change with the phase-in of the Economic Opportunity Act. Aside from streamlining the state's incentive programs, the new law gives bonuses to companies that develop in South Jersey, while upping awards for automotive companies.
Such a provision was all but tailored to Subaru of America, which is reportedly choosing between Cherry Hill and Philadelphia for its new 250,000-square-foot headquarters.