EAST RUTHERFORD, NJ—After a setback during the first quarter when large dispositions in some key market segments led to negative absorption, the Northern and Central New Jersey office market stabilized during the second quarter, according to Cushman & Wakefield. While leasing remained below the historic levels of 2015 and 2016, class-A demand rebounded somewhat while vacancy remained flat. Furthermore, asking rents in some key market segments continued to climb, specifically in the Hudson Waterfront.

“As long as the current economic cycle in the state continues and office jobs are created, demand for space should remain steady and even pick up in some key Northern and Central New Jersey submarkets,” says Andrew Judd, Cushman & Wakefield's New Jersey market leader. “We anticipate that leasing throughout the second half of 2017 will offset some large dispositions on the immediate horizon in the Waterfront, Morris County, Bergen County, and the I-78 Corridor, keeping vacancy in check. However, well-located, upgraded, and amenity-rich class-A assets will likely continue to outperform the market.”

Vacancy remained flat in the second quarter at 18.1 percent compared to the first quarter, and is down minimally (10 basis points) since one year ago, says Jason Price, Cushman & Wakefield's research director, Tri-State Suburbs.However, he added that the northern portion of the state recorded a quarter-over-quarter increase of 30 basis points to 19.3 percent, due in large part to an influx of available space in Bergen County during the quarter. As a result, the county saw vacancy rise to 19.2 percent, up from 16.9 percent at the close of the first quarter. Conversely, vacant space declined in Central New Jersey throughout the quarter as the rate fell 30 basis point to 16.4 percent. Of the counties in Central New Jersey, all but Middlesex posted positive net absorption for the quarter with Monmouth County leading the way.