SADDLE BROOK, NJ—The New Jersey office market's pace of improvement accelerated through the end of the year, building on the year's strong and positive momentum, according to CBRE's Q4 2014 New Jersey Office MarketView Report,. In the fourth quarter, leasing velocity surpassed Q3 by 7.9 percent, while net absorption reached its highest quarterly figure in 2014 and rental rates closed 3.4 percent higher than year-end 2013.  

Among the most significant transactions in the fourth quarter, Rutgers University purchased 33 Knightsbridge Road in the Route 287/Piscataway/Brunswick submarket, Prudential Financial renewed and expanded into 333,545 square feet in Newark, and PricewaterhouseCoopers renewed 182,963 square feet at 400 Campus Drive in Morristown.

In addition to New Jersey's typically active financial services, insurance and pharmaceutical sectors, educational organizations made a substantial showing towards the end of 2014. Key drivers in the education sector, all of which helped support New Jersey's office market recovery, included the expansion of Rutgers University, the expansion of New Jersey City University, as well as the organization of a startup private medical school through a partnership between the Hackensack University Health Network and Seton Hall University. 

Four of the companies that signed new lease commitments in the fourth quarter used the Grow NJ Assistance Program. Komar, Inc.; BlackRock, Inc.; Eltman, Eltman, & Cooper PC, and HNTB Corporation were awarded a combined total of approximately $55.9 million in tax credits. Together, these companies will bring a total of 850 new jobs to New Jersey. Overall in 2014, 23.6 percent of annual office leasing velocity was driven by Grow NJ, demonstrating how the program drives demand in New Jersey. 

“The Grow NJ Assistance Program continued to provide relief for the New Jersey office market and the job market as a whole,” says Leo Paytas, senior vice president, CBRE. “Despite fourth quarter changes to the incentives program favoring job creation over job retention, New Jersey maintains pro-growth policies and streamlined economic development efforts that we're confident will continue to attract new businesses to the state throughout 2015.”

In previous quarters, the New Jersey office market availability remained flat, but the fourth quarter reflected a break in that trend, with 521,755 square feet of net absorption in Q4 pushing 2014's annual absorption to 937,052 square feet. As a result, year-end availability hit 20.9 percent—its lowest point since 2008. 

The fourth quarter was not impervious to new blocks of space hitting the market. Barclays' 438,000-square-foot space at 70 Hudson Street in Jersey City and AT&T's 374,000-square-foot space at 340 Mount Kemble Avenue in Morristown were the largest additions to availability. While the availability rate in Morristown suffered, as a result of such a large space being added to the market, consistent demand in the Waterfront submarket counteracted what otherwise would have been a significant setback for the state. The Waterfront captured demand from organizations expanding their footprint, such as New Jersey City University, as well as new companies in the New Jersey market, including Komar, Inc. and Jet.com, Inc.

“Last year began with a positive outlook for New Jersey's office market and we're beginning 2015 with that same positive trajectory,” says Nicholas Hilton, first vice president, CBRE. “The positive performance over the course of the past year in all areas will certainly help boost market confidence as we dive into what has the potential to be a historically active year for the office sector.”