New Jersey’s life sciences market closed the year on a high note despite some headwinds. During Q4, New Jersey posted a vacancy rate for lab/R&D space of just 7.4%, a drop from 8.1% in Q3, according to CBRE’s Q4 2022 Life Sciences Figures. The vacancy rate is poised to decline further due to strong demand amid a dearth of new quality supply.
New Jersey continued to experience robust activity in 2022, resulting in positive net absorption of 97,692 square feet. Just 400,000 square feet of suburban Class A lab/R&D space is currently available with six major tenants seeking space in the market and no significant new construction underway. Average asking rents in New Jersey’s metro area reached $32.00 per square foot in Q4 2022, a $4.00 increase from the previous quarter.
“New Jersey attracts tenants looking for the most advanced lab space in the region,” said Thomas Sullivan, executive vice president, CBRE. “Venture capital funding also remained strong throughout the year, reaching nearly $400 million.”
Among the largest lease transactions in New Jersey during Q4 were Ascendia’s 60,000-square-foot lease in North Brunswick; Porton USA’s 15,500-square-foot renewal in Cranbury; and Doehler’s 11,600-square-foot commitment in North Brunswick. In addition, Thor Equities welcomed its first laboratory tenant at 95 Green Street in Jersey City after the completion of a comprehensive adaptive reuse project.
Average vacancy, including space listed for sublease, across the 13 largest U.S. life sciences markets rose to 5.7% in the fourth quarter from 5.1% in the third, but it stayed even with the year-ago figure and below pre-2021 levels. Average asking rent rates increased nationally to a record $62.16 per square foot per year in the fourth quarter, likely due to new, high-end lab space coming online in many markets. Lab space under construction grew to 40.3 million square feet in the fourth quarter, up roughly 8% from the third quarter. Meanwhile, demand for space declined by 8.4% to 18.5 million square feet.
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