Buoyed by strong quarterly and year-over-year rent increases in Newark, the Parsippany submarket, and the Union/Parkway Corridor, New Jersey office rents have rebounded, according to Transwestern’s Second-Quarter 2018 Office Market Report. The market experienced more than 500,000 square feet of positive absorption, while the vacancy rate improved from 15.3 to 15.0 percent.
On the quarter, positive net absorption occurred in 13 of 21 submarkets, with rents rising in 17 of 21 submarkets. In Newark, average asking rents exceeded $30 per square foot for just the second time since 2001.
“As expected, deals that were in the market during the second half of 2017 have finally come to fruition, and the New Jersey office market is poised to improve further as tenants that recently signed new leases take occupancy,” said Matthew McDonough, Transwestern managing director. “Office landlords that are investing capital to create vibrant environments are being rewarded with increased activity, which has led to the influx of higher asking rents.”
Large transactions completed during the second quarter have helped the market recover recent losses. Integra Life Sciences, Ralph Lauren and Mars Wrigley executed leases after previously receiving state tax credits, while Plymouth Rock will reside in a prime location previously occupied by the New Jersey Turnpike Authority following a modernization of the property.
The market’s diversity was on display during the quarter, as companies from various industries, including retail, manufacturing, life sciences, insurance and telecommunications, signed large office leases. Furthermore, companies have begun to seek spaces with expansion options, which is an indication of a growing economy.
“As the economy continues to grow, many developers remain hopeful that millennials will return to the suburbs, even if it is at a later age than that of past generations,” said Transwestern’s Matthew Dolly, New Jersey research director. “Grow New Jersey incentives are creating opportunities for the redevelopment and transformation of aging office product, which is having a profound effect on the state of the market, as evidenced by the large deals that were completed during the second quarter.”
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