Northern New Jersey maintained healthy industrial momentum, with 5.5 million square feet of leasing, its sixteenth quarter of positive absorption and an all-time low availability rate of seven percent. Central New Jersey recorded 8.4 million square feet of industrial leasing activity in the fourth quarter, bringing the region's 2017 total to 27.1 million square feet – the second-highest annual total on record.

“In the northern counties, properties located near the ports and the New Jersey Turnpike continue to attract the most demand,” Simon says. “Activity in Central New Jersey is being driven by the large number of users seeking new class A facilities, typically found along the New Jersey Turnpike and I-287. With extremely limited available space, users are expanding their search south of Exit 8A as well – a trend we expect will continue in 2018.”

On the office side of the market, a slowdown in North Jersey leasing activity during the fourth quarter, coupled with new availabilities, resulted in negative net absorption for the quarter. While the availability rate improved 40 basis points from the prior quarter, to 20.5 percent, this was a result of the ongoing adaptive reuse trend and not an increase in tenant occupancy. The lack of demand from larger office tenants in Central New Jersey pushed leasing activity down to levels not seen since 2014, and the availability rate remained unchanged, hovering around 19.0 percent for the third consecutive quarter.

“New Jersey office leasing in 2015 and 2016 saw its best two-year performance in more than a decade, so 2017's lackluster performance came as a bit of a surprise,” says John Obeid, senior director, Tri-State Suburban Research for Colliers. “Still, a lack of new available space kept overall net absorption positive—totaling nearly 59,600 square feet—during the fourth quarter. The amount of available space fell even further this quarter as a result of the ongoing adaptive reuse trend, which helped lower the availability rate to 19.8 percent, dipping under 20 percent for the first time since 2009.”

Significant office tenant commitments offered bright spots, including Societe Generale's 108,574-square-foot lease at 480 Washington Blvd. in Jersey City, and Movado Group's 90,050-square-foot lease at 650 From Road in Paramus. Altice USA made two notable commitments – 64,125 square feet at 30 Knightsbridge Road in Piscataway and 60,994 square feet at 40 Potash Road in Oakland. “Additionally, several large transactions are anticipated to close during the first quarter of 2018, which will help the new year get off to a strong start,” Obeid says.