SADDLE BROOK, NJ-CBRE Group says in a new analysis that the state office market looked more lively at mid-year than it has since 2007.
By CBRE's accounting, even though leasing velocity fell off by 16% in the second quarter of the year compared to the first quarter and the vacancy rate rose, the market's improvement over the past 12 months has been significant.
In the first half of this year, 3.57 million square feet was leased. That is 15% better velocity for the period than in 2012 and 20% than in 2011, notes the Saddle Brook-based real estate firm.
Large blocks of space hit the market during the second quarter, on the other hand, increasing vacancy to 21.5%.
The pharmaceutical and healthcare industries generated nearly half the activity in the second quarter, when a total of 1.63 million square feet was leased, says CBRE. Pfizer took 113,616 square feet at 1 Giralda Farms in Madison and Spectra Laboratories renewed and expanded to 190,000 square feet a 8 King Rd. in Rockleigh. Also, Bausch and Lomb's 90,000-sq.-ft. sublease at 283 King George Road in Warren.
CBRE says the flight-to-quality trend seemed to fade somewhat in the second quarter. Last year, Class A leasing accounted for 59% of leasing Q2; in Q2 2013, it was 46%.
“While the slowing of the flight-to-quality trend has had a negative effect on forward momentum, the New Jersey office market is still in the midst of an ongoing recovery,” said Leo Paytas of CBRE's Saddle Brook office. “With four blocks of space over 100,000 sq. ft. coming onto the market in the second quarter, it's not surprising that net absorption was down.”
He said the company was “extremely encouraged” by the mid-year results.
CBRE also reported that:
- The Route 287/78 submarket had the strongest leasing activity, 283,618 square feet – including the Spectra Labs' deal.
- Asking rents decreased $0.20 per square foot from the first quarter, to $24.03.
- The waterfront submarket remains the state's highest-priced submarket at $31.77 per square foot, followed by Princeton at $27.95 per square foot.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
