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Cassidy Turley, a leading commercial real estate services provider in the U.S., today released its Second Quarter Office Market Snapshot for the Northern and Central New Jersey markets. Overall, both markets posted growth and seem to be benefitting from the increase in consumer confidence, which is crucial to the recovery effort. New Jersey is also experiencing gains in employment and a reduction in the overall unemployment rate, which stood at 8.6% in May, following six months of growth.
The Northern NJ office market is gaining momentum with 470,286 square feet of positive absorption in the second quarter. A bounce in leasing activity caused the vacancy rate to slide to 14.4% from 14.7% in the first quarter. Healthcare and medical office tenants are driving most of the leasing activity and are therefore the big players in the market. Top performers were the Suburban Essex/I-280 and Morristown submarkets with 134,521 square feet and 133,956 square feet of positive absorption, respectively. The Morristown Area submarket is showing signs of strength with two consecutive quarters of positive absorption for a total of 419,058 square feet. Although no new construction delivered to the market in the second quarter, the 420,411 square feet of office space at 2 Riverfront Plaza in Newark, which is currently under construction with 337,545 square feet serving as Panasonic’s new headquarters, will certainly impact the third quarter.
The Central NJ office market reported an impressive 622,408 square feet of positive absorption in the second quarter. The vacancy rate dropped to 16.5% from a historical high of 17.1% in the first quarter. Asking rates were down slightly to $23.45 per square foot from $23.74 in the previous quarter. Healthcare and pharmaceutical tenants lead most of the market activity with the Princeton Area submarket boasting 369,944 square feet of positive absorption in the second quarter. Looking forward, landlords will need to focus on renovating current space as tenants increasingly demand more efficient floor plans and shared workstations to encourage employee collaboration. On a positive note, concession packages from landlords seem to have stabilized. “This quarter showed encouraging growth in the Northern and Central NJ office markets, and this increase in activity reflects the improving local economy,” says Raymond Trevisan, Managing Director, Cassidy Turley.