Colliers reporter office leasing to have dropped to 2.2 million square feet during the quarter, largely in part by an increase in user-buyer transactions.
“This dynamic pushed year-to-date net absorption in the black for the first time in 2017,” Colliers’ John Obeid, senior director of tri-state suburban research said. “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.”
Average asking rents rose to $0.18 per square foot quarter-over-quarter, to $26.51 per square foot.
Eleven of 13 submarkets in northern New Jersey tracked a decline in availability during Q3, Colliers said. Office leasing totaled 1.2 million square feet, marking an increase of 18 percent from last quarter.
“Leasing activity in Monmouth County and the Hudson Waterfront improved modestly, as both submarkets each posted just over 110,000 square feet of deal volume,” Cushman & Wakefield said in a news release. “In terms of industries, demand remained diverse in New Jersey this past quarter as computers/technology firms, life sciences, health care and manufacturing companies all contributed to the leasing total. Meanwhile, the majority of leases completed over 20,000 square feet were within Class A product, although small businesses continued to mainly ink leases in Class B buildings.”
In central New Jersey, five of eight submarkets reported positive net absorptions, with the region as a whole seeing office leasing reach 983,611 square feet. The 287 corridor saw the most positive absorption at 111,499 square feet. The Route 78/Somerset submarket on the other hand, reported 316,682 square feet of negative net absorption.
“Overall asking rents, now at $27.80 per square foot, have remained on their upward path, rising 5.3 percent over the last year,” Jason Price, Cushman & Wakefield’s tri-state suburbs research director, said. “Since the second quarter, both Central and Northern New Jersey have experienced further increases, mainly driven by those premium submarkets which are close to mass transit — such as the Waterfront, Metropark, and Newark.”
Class A asking rents increased by an average of 6.9 percent in the Waterfront, Metropark, Newark, Princeton and Route 10 and 24 submarkets, Cushman & Wakefield said. Monmouth County’s average rental rate reached $31 per-square-foot for the first time in recent history.
In southern New Jersey, commercial brokerage firm Wolf Commercial Real Estate reported 421,113 square feet of new leases and renewals executed in Q3 in Burlington, Camden and Gloucester counties, representing an increase of 6.6 percent from the previous quarter.
Overall vacancy in the market dropped to 9.75 percent during Q3 with Camden County’s vacancy declining from 13.3 percent to 10.8
“For most of 2017 we have seen an overall positive tone and conditions that usually indicate a period of strength,” Jason Wolf, founder and managing principal of WCRE said. “The national economy has been adding jobs, the financial markets are on a hot streak, and our market continues to attract outside investors – yet increased activity and enthusiasm are tempered by trouble in the retail sector and uncertainty related to current events.”
The third quarter saw $105 million of completed sales transactions across 1.76 million square feet. New leasing accounted for 43.3 percent of all new deals while net absorption reached 91,600 square feet.