Healthy Leasing Volume Drives New Jersey Office Market's Best Third Quarter Since 2003

Transwestern Report Shows 880,000 SF in Positive Absorption

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Oct 07, 2015, 09:23 ET

PARSIPPANY, N.J., Oct. 7, 2015 /PRNewswire/ -- Pent up demand for Class A space is driving up asking rents and accelerating leasing activity, contributing to the New Jersey office market's best third quarter since 2003, according to Transwestern's Third-Quarter 2015 Office Market report. The strong activity resulted in approximately 880,000 square feet of positive net absorption – the highest level since second-quarter 2014.

"The New Jersey office market was extremely active this summer, as large companies continue to choose the Garden State as a strategic location to grow and run their operations," said Transwestern's James Postell, partner and leader of the New Jersey office. "Life sciences, healthcare and medical companies such as Valeant Pharmaceuticals, Celgene, Memorial Sloan Kettering Cancer Center and Zoetis remain active in the region, and many are benefiting from the state's economic incentives."

Year-over-year, net absorption is approximately 1.8 million. It marks the fifth straight quarter of year-over-year absorption exceeding 1.4 million square feet.

"Despite the positive absorption this past quarter, outdated New Jersey office stock continues to remain vacant, and if not addressed, this will certainly tarnish the progress the market has made," said Matt McDonough, managing director at Transwestern. "Lease-up is often incumbent upon flexibility, and in many cases, tenants are now investing their own capital on fit-outs to get exactly what they want."

With some businesses choosing to downsize into more efficient space, owners across the state are responding by adding desirable amenities in order to compete. While corporate consolidations remain a concern, transit-oriented and recently renovated office properties are commanding higher lease rates, prompting more owners to invest in capital improvements. In that vein, developers and investors are likely to redevelop properties to accommodate the growing number of medical office tenants.

While some municipalities are forming councils to proactively inspire growth within their towns, the New Jersey Partnership for Action continues to implement several incentive programs to reward growing companies within the state.

For more information, contact Matthew Dolly at 973.947.9244 or [email protected]. The full report will be posted on Transwestern's research page when available.

ABOUT TRANSWESTERN

Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Management, Tenant Advisory, Capital Markets, Research and Sustainability services, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern. For updates from the New Jersey office, follow @TranswesternNJ.

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SOURCE Transwestern