SADDLE BROOK, NJ-A burst of office leasing in Central New Jersey has led to positive absorption for the state overall for the first time this year, according to CBRE's Third Quarter 2011 New Jersey Office MarketView Report. But don’t expect that trend to continue.
Central and Northern New Jersey combined for the highest volume of quarterly net absorption in five years, with the central portion of the state absolutely dominant, reporting 850,626 square feet of positive absorption. The northern sector of the state posted just 11,476 of positive absorption. However, this is unusual, as the Northern market typically outpaces the central sector.
The dominance "speaks to the lease expirations that lined up at this time," Jeff Babikian, CBRE executive vice president, tells GlobeSt.com. "It is not indicative of a pattern that we will be seeing in the long term."
As has been typical all year, tenants are fleeing to quality, with 73.6% of velocity occurring in class A properties. Submarkets with the highest leasing velocity (excluding renewals) were Princeton with 560,000 square feet, Parkway Corridor at 150,000 square feet, and Morristown at 140,000 square feet.
Renewals, too, have been significant, accounting for 39.1% of overall activity in the quarter, and 41.3% of activity for the year to date. The availability rate dropped slightly from the second quarter to 21.1%, though that is expected to rise in the near future as a number of lease expirations come on the market. Montvale/Woodcliff Lake reported the lowest availability for the quarter, with 6.4%, followed by the Waterfront at 9.3% and Western Interstate 78 at 10.9%, the report says. While the average asking rents dipped from the previous quarter to $24.19 per square feet, that figure is a $0.17 per square foot increase over the third quarter of 2010.
Most critical, however, is the consolidation that has been taking place. Companies are signing deals and moving, Babikian says, but taking less overall space. "We’ll see positive velocity," he says. "But negative absorption."
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