Hudson Waterfront, Newark Skyline Post Lower Vacancy During Past Year

Trophy office buildings that make up the Newark and Hudson Waterfront skylines continued to post significant lower vacancy and higher rents compared with the overall New Jersey office market, according to JLL’s 2016 Skyline.

Newark skyline prices increased 0.7 percent to $33.03 per square foot, compared to the second quarter of 2015. On the Hudson Waterfront, prices declined by 0.3 percent to $37.80 per square foot during the same time period, as the absorption of higher priced office space exerted downward pressures on the submarket’s rents. Average asking rental rates for both submarkets are expected to increase going forward.

Hudson Waterfront

Attributes including proximity to Manhattan and competitive rental rates for high-end Class A space have historically attracted occupiers to the Hudson Waterfront skyline. The state of New Jersey’s aggressive economic incentives enticed tenants, as evidenced by recent demand throughout the submarket. Brown Brothers Harriman & Co., JPMorgan Chase & Co. and New York Life Insurance Company were among the companies that received incentives to relocate or expand their operations within the Waterfront Skyline during the past year.

“While financial services firms initially populated the Waterfront Skyline, we expect to see other business sectors establish their footprints in this strategically located market,” said Stephen Jenco, Vice President of Suburban Tri-State Research for JLL.

The overall vacancy rate for Hudson Waterfront trophy properties fell to 13.3 percent compared to nearly 18.0 percent one year ago. E-commerce start-up Jet.com recently doubled its headquarters to 80,000 square feet, while Newell Brands leased nearly 100,000 square feet for its operations. Both transactions were completed at Waterfront Corporate Center III in Hoboken.

Newark

After reaching 18.3 percent in 2014 as a result of Prudential Insurance shuffling its spaces at Gateway Center, the Newark Skyline vacancy rate has since trended lower and dropped below 17.0 percent by midyear 2016.

On the activity front, Prudential Insurance moved into its new 740,000-square-foot building near Military Park last year, while internal growth also prompted the Newark-based insurance services giant to remain in 400,000 square feet at Gateway Center, which contributed to the market’s lower vacancy rate.

“Several development projects are helping to revitalize Newark’s downtown area and position this market for future growth,” said Jenco.

Ground was broken on the $174.0-million restoration of the Hahne & Company building, which involves rehabilitating and converting the former department store into residential, retail and office space. A new Rutgers University Arts and Cultural Center, National City Bank’s headquarters and Whole Foods Market will anchor a large portion of the space.

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