According to CBRE’s Q1 2018 office market report, the New Jersey commercial real estate market remained flat, but renewals totaling more than 1 million square feet buoyed the sector. The market’s overall good heath was due to limited new construction, tenants relocating to higher-quality office space and continued strong demand from the life sciences sector.
Total leasing activity reached 1.29 million square feet, compared to 1.45 million square feet in Q4 2017 and 2.28 million square feet in the first quarter a year ago. Meanwhile, net absorption was up by more than 730,000 square feet as compared to the fourth quarter of 2017 and availability exactly matched the five-year average. While Central New Jersey posted a very solid 534,400 square feet of positive absorption, Northern New Jersey, which had several large, unleased buildings come online, registered a negative 260,700 square feet.
“Despite lackluster overall leasing activity during the first quarter of the year, the New Jersey office market did present a number of positive aspects that are providing optimism for the remainder of the year, including several large renewals,” noted Ed DaCosta, executive vice president, CBRE. “Another real cause for optimism on the leasing front is in the form of several large deals that we are monitoring and which are on track to close in the second and third quarters of 2018.”
The average asking rent increased just $0.16 per square foot in the first quarter. This brought the average rate to $26.24 per square foot. Year-over-year however, rents improved by $0.50 per square foot, an increase of 1.1 percent. The current rate also represents an increase of 111 basis points (bps) above the five-year average, an advance of 5.2 percent.
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