CBRE GROUP INC. NEW JERSEY MARKETVIEW REPORT: New Jersey Office Market Sees Uptick in Q4 2013, Continuing Recovery
The New Jersey office market ended 2013 with substantial improvements in leasing and sale activity, according to CBRE Group, Inc.’s Q4’13 New Jersey Office MarketView Report. The year closed with 7.4 million square feet of leasing velocity, which marks a greater than 30 percent increase from 2012 and the highest year-to-date velocity post recession.
The relocation of large corporations such as Valeant Pharmaceuticals, NRG Energy, GAF Corporation and Fiserv contributed to this significant statewide increase. The Parsippany submarket posted the highest Q4 leasing, with 600,337 sq. ft. of new activity, followed by the Parkway Corridor submarket, with 131,882 sq. ft.
“This considerable increase in leasing velocity can be attributed to a boost in big block lease transactions,” said Joe Sarno, executive vice president, CBRE New Jersey. “We’re seeing companies relocate in an effort to occupy modern or recently renovated office properties. In fact, we saw 14 transactions for more than 100,000 sq. ft. in 2013, compared to just nine of that size in 2012.”
Over the course of the year, there was 9 million sq. ft. of renewal activity and more than 850,000 sq. ft. of user-buyer sales in the state. Despite the influx of availabilities, this positive activity held the availability rate steady at just above 21% for the fifth consecutive year.
With 2.5% sublet availability in the fourth quarter, the 3.8 million sq. ft. of available space remains among the lowest levels in historical tracking. Submarkets with the lowest availability rates in the state include Montvale/Woodcliff Lake at 11.7%, Princeton at 12.6% and Greater Monmouth County at 16.4%.
Net absorption in the state fell into negative territory for the first time since 2009, with a year-end sum of negative 11,450 sq. ft. Market activity that contributed to the negative absorption included 307,758 sq. ft. of new availability at 30 Hudson Street in Jersey City and 471,813 sq. ft. at 1 Lake Street in Upper Saddle River.
In the fourth quarter, the average asking rate increased marginally to $24.02 per sq. ft., breaking four consecutive quarters of decline. Submarkets with the highest asking rent include Waterfront at $31.40 per sq. ft., Princeton at $26.92 per sq. ft. and Parkway Corridor at $25.36 per sq. ft.
“Grow NJ, the State’s incentive program, drove demand in the fourth quarter as Valeant Pharmaceuticals and VF Sportswear relocated their operations from New York City,” said Greg Barkan, senior vice president, CBRE New Jersey. “We expect this trend to continue in 2014, as tenants are looking to benefit from the state’s favorable incentives.”
Mr. Barkan also noted that 29.4 million sq. ft. of the leases in New Jersey are expected to roll over in the next 24 months, which will provide an additional boost to the office market.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.