• Concentrated office leasing in New Jersey’s core submarkets resulted in nearly one million square feet of net absorption in Q3 2018.
• “I call us now ‘the State of innovation’ and I think there’s a lot of data that underpins that,” Governor Phil Murphy said recently, and Q3 helped legitimize his statement as the majority of the third quarter’s activity was attributed to technology and life science companies.
• Year-over-year comparisons show the effect of developer improvements. According to CoStar, properties delivered in the last ten years average 4% vacancy compared to properties that are 11-50 years old, which average 18% vacancy. Expect leasing activity to remain steady until demand can be met.
A glimpse of future real estate trends can be seen in stories of growth throughout New Jersey’s office market. Year-over-year comparisons show the effect of developer improvements as the spotlight shines on labor statistics. New administrative policy has yet to bolster quarterly numbers, but substantial activity is expected from state incentives and designated Opportunity Zones.
“I call us now ‘the State of innovation’ and I think there’s a lot of data that underpins that,” Governor Phil Murphy said during an Ask the Governor session at Bell Works in October.
Concentrated office leasing in New Jersey’s core submarkets resulted in nearly one million square feet of net absorption in Q3 2018. The 345,000 square foot relocation of Teva Pharmaceuticals in Parsippany signaled a healthy demand for amenity-rich Class A space, along with seven other transactions topping 25,000 square feet.
From a distance, the boost in activity may paint a picture of what’s to come in suburban markets throughout the Garden State. Build-to-suits will make up a majority of new supply as outdated office campuses continue to burden market analytics. According to CoStar, properties delivered in the last ten years average 4% vacancy compared to properties that are 11-50 years old, which average 18% vacancy. Expect leasing activity to remain steady until demand can be met.
Much of the third quarter’s activity was attributed to technology and life science companies like Insmed, who relocated to its new 115,558 square-foot global headquarters at 700 Rt. 202/206 North in Bridgewater. In Morris County, Alvogen signed on for 84,609 square feet at 44 Whippany Road in Morristown – a property that underwent a $7 million transformation in 2017.
Notable transactions also included Deloitte’s 175,000 square foot renewal in Parsippany, as well as BlackRock Financial’s 204,443 square-foot renewal in West Windsor.
“We expect suburban markets to draw developers and employers alike to take a chance on their municipality. Those words, “culture” and “community” will remain major branding keywords for projects and towns. The successful markets will be the ones that offer an appealing mix of office, retail and residential options, as our working and social lives become more interconnected.”
On the waterfront, E-Trade Financial completed a renewal for 132,000 square feet at Harborside Plaza 2. In Hoboken, Jet.com extended its roots into Waterfront Corporate Center II as the four-year-old company eclipsed 200,000 square feet in two of the campus’s three buildings.
Inspiring startups and a thriving innovation economy will soon define the new office standard in New Jersey. As 2020 approaches, a close eye will be on economic indicators as a new generation of workers seek office space.
