New Jersey's office market ended 2013 on a high note, notching the second-highest quarterly leasing volume in four years even as large blocks of space continued to open.
Those were the findings of a fourth-quarter market study by brokerage firm Cushman & Wakefield, which tracked 2.16 million square feet of leasing in northern and central New Jersey over the period. The firm also recorded nearly 7.9 million square feet of activity for the year, up 14 percent from 2012 as the market looks for much-needed momentum.
The fourth-quarter volume, the second-highest since 2009, was fueled by deals in Central Jersey submarkets such as the I-78 Corridor, Princeton and Metropark, the firm said in a news release. North Jersey was less successful, coping with an overall slowdown in leasing and building owners who put large spaces on the market in places such as Newark and Jersey City.
That pushed North Jersey's vacancy up by one percentage point to 21 percent, Cushman & Wakefield found. Vacancy in Central Jersey remained flat at 17.8 percent going into 2014, as its own large space dispositions offset the strong leasing activity.
The key deal in the fourth quarter involved Valeant Pharmaceuticals International Inc., which took 310,000 square feet at 400 Somerset Corporate Blvd., in Bridgewater. The lease with SJP Properties was among the immediate beneficiaries of New Jersey's new business and development incentives, which were overhauled in September.
The new programs also brought several deals to the Hudson waterfront, which has faced sagging demand in recent months and pending vacancies by some large financial services firms. The new tenants include VF Sportswear and the Union of Orthodox Jewish Congregations of America.
All told, the activity on the waterfront totaled more than 200,000 square feet for the first time since mid-2012, Cushman & Wakefield reported.
"It is safe to say that New Jersey's office market is seeing notable momentum heading into 2014," Kimberly Brennan, C&W's New Jersey market director, said in a prepared statement. "We look forward to a promising year."
The firm also noted that stepped-up demand pushed rental rates up by a full $1 during the fourth quarter. That brought the rates to $26.39 per square foot, up 6.3 percent year over year.