After trending higher during the past six months and approaching 25.0 percent in early 2017, the Northern and Central New Jersey overall vacancy rate slipped to 24.6 percent at mid-year, according to JLL.A slight uptick in tenant requirements outpaced additional supply generated by consolidations and restructurings.
Leasing velocity fueled nearly 510,000 square feet in positive net absorption in Northern and Central New Jersey during the second quarter, with nearly 85.0 percent of this activity focused in Class A buildings. This demand put a dent in the 914,960 square feet of negative net absorption witnessed in the first quarter. Central New Jersey office buildings claimed more than 90.0 percent, or 428,530 square feet, of the Class A space absorbed this quarter.
“The vast majority of the positive net absorption registered this quarter was concentrated within Class A buildings in Northern and Central New Jersey,” said Jonathan Meisel, Managing Director with JLL. “High-end office space in mass-transit oriented or suburban-centric markets is expected to remain on the radar screen of office occupiers during the second half of the year. Savvy landlords seeking to attract these users are upgrading buildings with amenities to help make their product stand above the competition.”
“While leasing volume posted a slight improvement during the second quarter after falling to a nearly eight-year low earlier this year, transactions in excess of 100,000 square feet remained elusive,” said Stephen Jenco, Vice President of Suburban Research, with JLL.“The information/technology sector accounted for more than one-quarter of the leasing activity in the Northern and Central New Jersey office market during the second quarter, as AT&T renewed its 252,500 square feet at 30 Knightsbridge Road in Piscataway.”
Highlights of the secondquarter of 2017 include:
The Northern and Central New Jersey Class A average asking rental rate for direct space increased 1.1 percent from the previous quarter to $29.70 per square foot,as new availabilities with higher asking rents continued to boost the average Class A rental rate. Year over year, the state’s Class A rental rate for direct space rose 5.7 percent from $28.10 per square foot.
With an average asking rental rate of $43.05 per square foot in the second quarter, the Hudson Waterfront continued to maintain the highest Class A rent in the office market. Metropark’s asking rental rateof $35.01 persquarefootrepresented the highest Class A rent in Central New Jersey.
The Monmouth submarket recorded 146,400 square feet in positive net absorption in the second quarter, the largest volume recorded by any Northern and Central New Jersey Class A market this quarter. Theredeveloped Bell Works office building at 101 Crawfords Corner Road in Holmdel continued to fill its tenant roster. The latest leases completed there includeThe Guardian Life Insurance Company of America for90,000 square feet and Santander Bank for 38,950 square feet. The Monmouth Class A vacancy rate slipped below 22.0 percent this quarter, compared to 24.4 percent in early 2017.
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JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 1,000 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility management, and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin(Metropark) and East Rutherford, also acts as a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work in New Jersey.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
