EAST RUTHERFORD, NJ—Leasing activity in the Northern and Central New Jersey office market was down approximately 45 percent in 2017 compared with deal volume recorded in 2016, according to Jones Lang LaSalle. The state registered 7.1 million square feet in transactions in 2017, compared with 12.9 million square feet in deals the year before.

“Much of the demand for office space in 2017 was fueled by smaller leases, rather than the 100,000-square-foot and larger transactions needed to put a significant dent in the office vacancy rate,” says Stephen Jenco, vice president and director of suburban tri-state office research. “Less than five percent of the leases completed in 2017 were larger than 100,000 square feet, compared with 15 percent of transactions during the same period last year.”

Despite the slowdown in leasing, after recording nearly 914,960 square feet of negative net absorption during the first quarter of 2017, absorption turned positive for the next three quarters as tenant requirements edged vacancies generated by consolidations. Approximately 606,500 square feet was absorbed in the Northern and Central New Jersey office market during the fourth quarter of 2017. This activity led to 957,770 square feet being absorbed in the office market during 2017, which nearly doubled the absorption recorded in 2016. The Northern and Central New Jersey overall vacancy rate subsequently declined from 24.5 percent in the third quarter to 24.1 percent at year-end 2017.