An uptick in leasing activity drove South Jersey's office market in 2013, pushing down vacancy from early in the year and fueling hopes of momentum for 2014.
Those are the findings of a year-end report by Wolf Commercial Real Estate, a Marlton-based brokerage. The firm, which tracks about 17.5 million square feet of office space in Burlington, Camden and Gloucester counties, charted about 1.6 million square feet of lease volume last year, up about 15 percent or 206,000 square feet from 2012.
The report noted that fourth-quarter leasing activity was down slightly from 2012, but the total amount of occupied space in the region increased by about 102,000 square feet during that time. The deals brought vacancy to about 15 percent, after Wolf reported that vacancy was 18 to 19 percent during last year's first quarter.
Wolf also said it expects momentum to continue, citing about 400,000 square feet of space that's expected to be leased early this year.
"The pipeline of prospects in the market is probably the healthiest it's been in a while," said Jason Wolf, the firm's principal. He said most of the deals range from 20,000 to 60,000 square feet, pointing to "at least eight to 10 requirements on the street right now that are in the process of relocating, restructuring or expanding."
Some of the largest deals took place with businesses that specialize in government and computer services, technology, staffing and health care management. For instance, technology provider CDW Corp. signed a new 31,000-square-foot lease in Cherry Hill.
In the meantime, Voorhees-based Virtua Health Systems renewed a 55,000-square-foot lease in Marlton and signed a new 18,650-square-foot lease in Mount Laurel.
Wolf said most of the prospective deals come from users already in South Jersey, but that could change thanks to the state's recently overhauled incentive programs. Much like North Jersey, which is now more competitive with Manhattan, he said, there's now an increased competition between South Jersey and Philadelphia.
"Any large business in the market — they're playing both sides of the bridge," Wolf said.
While leasing activity was promising, the biggest splash of the quarter was the announced sale of Liberty Property Trust's 1.2 million-square-foot portfolio. The 24-building collection, mostly in Burlington County, is under agreement to be sold to Greenfield Partners for an estimated $127 million.
South Jersey still has some submarkets that are struggling, with the largest vacancies remaining in Voorhees, Pennsauken and the west side of Cherry Hill, the report said. The strongest submarkets at year's end included Moorestown, Marlton and Mount Laurel.
"You have new owners coming in … so it's reenergizing and definitely bringing some confidence back into the market," Wolf said.