Leading global real estate services firm Cushman & Wakefield released its third quarter 2022 office and industrial statistics for New Jersey, showing robust leasing activity, despite an increasing vacancy rate in the office market and slower demand, yet strong fundamentals, in the industrial market.
“Leasing activity in the New Jersey office market remained robust and is on pace to surpass the 2021 full-year leasing figure,” said John Obeid, senior research manager for the New Jersey region. “Class A leasing accounted for 69% of the year-to-date leasing velocity and is up 88.6% from last year, a clear sign of sustained tenant demand for modern, amenity-rich buildings.”
Despite strong demand, large blocks of vacant space continued to return to the New Jersey office market, stalling further improvement in the vacancy rate, which increased 20 basis points quarter-over-quarter to 20.6%. This quarter reported negative 1.3 million square feet of net absorption, with Northern New Jersey driving occupancy losses with 1.4 million square feet of negative net absorption while Central New Jersey recorded 88,518 square feet of positive net absorption. Still, leasing remained robust, with 1.9 million square feet of new leases recorded during the third quarter, bringing the year-to-date volume to 6.5 million square feet.
New leasing activity in New Jersey’s industrial market slowed during the third quarter of 2022, as unprecedented occupier demand over the last two years satisfied many occupier space requirements and reduced the supply to record lows. Renewal activity persisted, with five out of the top 10 transactions being stay-in-place renewals. The vacancy rate for warehouse space increased 110 basis points from last quarter to 2.9% as 5.7 million square feet of new vacancies were added to the market. Total new leasing activity for warehouse space reached 3.2 million square feet, down 47.5% from last year. Pricing increased 7.7% quarter-over-quarter, with the direct average asking rent for warehouse space averaging $15.04 per-square-foot.
“Although warehouse leasing activity slowed, demand for industrial outdoor storage surged as the Port of New York and New Jersey handled a historic number of containers,” added Obeid. “Overall, strong underlying market fundamentals persisted, leading to an increase in pricing despite slower demand.”
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