PARSIPPANY, NJ-Central New Jersey’s office market is making a roaring comeback, as all six of its submarkets recorded positive absorption in the second quarter, the first time this has occurred in recent memory, says new research from Jones Lang LaSalle. The overall vacancy rate fell by 0.5 percentage points.
In fact, the central portion of the Garden State performed “drastically better” than the Northern market, nearly equaling the more densely packed market’s activity, James J. Medenbach, senior vice president of JLL, tells GlobeSt.com. Just three of the 11 submarkets in Northern New Jersey saw available space decline in the last quarter, with Newark/Elizabeth, Parsippany and Central Bergen particularly hard hit. But don’t necessarily expect that continue.
“You may find that the six markets in Central New Jersey may be an anomaly,” Medenbach says. “If you look at the next quarter, you might find it will not be a trend that continues.”
Statewide, the total vacancy rate for class A and B space was 25.8%, compared to 26.4% from a year ago. In Northern New Jersey, it was 22.7%, while the rate in Central New Jersey was 30.4%. Leasing absorption has been “very anemic” since 2008, Medenbach adds, and has been coasting along the bottom for several quarters, he says. “Unless there’s a horrific recession, there will be a slight uptick,” though a true increase won’t occur until 2012, he adds.
But improvement is on the horizon, particularly for large deals. Transactions of more than 100,000 square feet doubled over the previous quarter (from three to six), and more than 20 are in the pipeline to close in the next four to 18 months.
Renewals comprised nearly half of the total leases signed, including such major deals as Merrill Lynch’s 260,000-square-foot lease at 95 Greene St. in Jersey City and Verizon Wireless’ extension of 210,254 square feet in Warren. Major new transactions include Panasonic’s 250,000-square-foot lease for Newark and Evonik Degussa’s lease for 150,500 square feet in Parsippany. Deals of more than 100,000 square feet more than doubled over the first quarter.
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