According to CBRE Group, Inc.’s Q2 2015 New Jersey Office MarketView Report, New Jersey’s lifestyle markets drove demand for Class A office space from progressive and growing occupiers in the first quarter. Located throughout northern and central New Jersey, the “lifestyle” submarkets include Morristown, the Waterfront, Central Bergen, Meadowlands, Newark, Metropark and Princeton. These lifestyle markets offer housing and amenities within walking distance to places of work.
While New Jersey’s office availability has remained above 20 percent since the beginning of 2009, tenants seeking office space in the core lifestyle submarkets are facing limited opportunities due to the markets’ tighter performance. Class A stock in Princeton, Metropark and the Waterfront sits at a combined availability rate of just 13.7 percent.
“Statistically, New Jersey appears to maintain an abundance of unoccupied, outdated New Jersey office inventory, but a closer look into the state’s lifestyle markets conveys a different story,” said Ed DaCosta, executive vice president, CBRE. “As tenants seek more efficient and collaborative work environments with amenities, Class A product is being redefined and these lifestyle markets are generating the greatest demand.”
At the close of Q2 2015, overall leasing velocity in New Jersey was 24.3 percent below the level of the same period the year prior, as secondary market areas and less desirable properties continue to struggle with tenant attraction. Meanwhile, there are only three blocks of available Class A space greater than 100,000 square feet in the Meadowlands, only two in Princeton and only one block in Metropark.
“Using the Meadowlands as an example, tenants continue to align themselves with the best space opportunities, creating an onset of competition for the most desirable buildings—a situation we have not seen in New Jersey for quite some time,” said Sarah Jones-Maturo, first vice president, CBRE. “This emerging market dynamic is indicative of continued improvement in key submarkets and points toward a further uptick in activity for the coming quarters.”
GlaxoSmithKline’s 144,536-sq.-ft. commitment in Warren Township and New York Life Insurance Company’s 114,691-sq.-ft. new lease in Jersey City were the largest conventional leases signed during the quarter. The pharmaceutical/healthcare sector accounted for more than 25.9 percent of velocity this quarter, followed by financial services companies, accounting for more than 11.8 percent, and insurance companies, accounting for more than 10.2 percent.
Large blocks of space that came to market during the quarter included 660,000 sq. ft. at 777 Scudders Mill Road in the Princeton submarket and 205,000 sq. ft. at Hess Plaza in Parkway Corridor. These availabilities drove negative net absorption.Related Articles: