CBRE REPORT: CENTRAL JERSEY OFFICE MARKET LEADS CURRENT REBOUND
SADDLE BROOK, N.J. (NOVEMBER 14, 2011) – The booming office market activity in Central New Jersey was the driving force behind New Jersey’s positive absorption for the third quarter, according to CBRE’s Third Quarter 2011New Jersey Office MarketView Report. Continuinga year-long trend, during the third quarter the central portion of the state carried the market with 850,626 sq. ft. of positive absorption, while Northern New Jersey only saw 11,476 sq. ft. of positive absorption. The total of 862,102 sq. ft. represented the first positive quarterly net absorption this year and the highest volume of quarterly net absorption in five years.
“The market continues to show signs of stability, and, while that growth has been slow, we did notice a steady march toward recovery in the third quarter and believe with deals in the pipeline, New Jersey remains on track to surpass last year’s leasing velocity levels,”saidJeff Hipschman, senior managing director and head of New Jersey operations for CBRE. “Northern New Jersey’s slow progress, due in part to a number of submarkets struggling with an overabundance of available office space, has consistently counteracted what would otherwise be positive momentum for the state overall.”
Renewals accounted for a large portion (39.1%) of overall activity in the quarter; 41.3% year-to-date. An amazing 73.6% of leasing velocity occurred in Class A properties, which continue to command higher rents as tenant seek to capitalize on current market conditions and secure high-quality space.
New Jersey’s overall average asking rent declined to $24.19 per sq. ft. from the second quarter, however thethird quarter’s average asking rates were elevated by $0.17 since last year at this time. Direct and sublet average asking rents also dipped, with the sublet rate dropping a dramatic $1.77 since last quarter and now standing at a record low of $18.99 per sq. ft.
Leasing velocity in the state totaled 1,577,000 square feet in the third quarter, up approximately seven percent from the second quarter. Submarkets with the highest leasing velocity, not including renewal activity, were Princeton at 560,000 sq. ft., Parkway Corridor at 150,000 sq. ft., and Morristown at
140,000 sq. ft. The largest new lease since 2005 also occurred in the third quarter: Novo Nordisk’s 500,000 sq. ft. deal at 800 Scudders Mill Road.
The availability rate dropped slightly from last quarter, totaling 21.1 percent. Availability has been relatively stagnant over the past 10 quarters, however it is expected that it will rise as an expected high volume of new office availabilities will have a negative impact in the coming quarters. Submarkets with the lowest availability for the third quarter are Montvale/Woodcliff Lake at 6.4%, the Waterfront at 9.3%, and Western Rt. 78 at 10.9%.
1,570,000 square feet
1,466,411 square feet
Avg. Asking Rents
$24.19 per sq. ft.
$24.56 per sq. ft.
862,102 square feet
- 240,000 square feet
The top New Jersey office transactions from the third quarter included:
· Novo Nordisk’s 500,000-square-foot new lease transaction at 800 Scudders Mills Road in Plainsboro;
· Atlantic Health System’s 206,253-square-foot renewal at 475 South Street in Morristown;
· Deutsche Bank’s 205,614-square-foot renewal at 2 Gatehall Drive in Parsippany;
· A 203,000-square-foot build-to-suit for Wyndham Worldwide on Sylvan Way in Parsippany;
· Novartis Consumer Health’s 150,073-square-foot renewal at 200 Kimball Drive in Parsippany.
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 firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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 Web site at www.cbre.com.