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By Joshua Burd
A recent spike in leasing demand has boosted New Jersey’s office market to start the year, even as large blocks remain available amid corporate downsizing and concerns about the economy.
According to CBRE, office users in northern and central New Jersey leased 1.7 million square feet in the fourth quarter of 2023. That total was up 103 percent from the third quarter and 38 percent above the five-year quarterly average, the firm found, helping the market end the year on a high note as tenants remained focused on upgrading their space.
“While economic uncertainty continues to stifle a full office leasing recovery, the fourth quarter of 2023 showed a market poised for better times and continued activity,” said Rémy P. deVarenne, an executive vice president with CBRE. “Several large relocation and expansion deals completed in 2023 brought the full-year leasing total to 5.08 million square feet, only 9 percent below 2022’s full-year total of 5.60 million square feet. Tenants are still focused on quality space, as 85 percent of all leasing in 2023 was done in Class A buildings.”
That included what CBRE found was northern New Jersey’s best quarter since 2021 — with 1.07 million square feet of lease deals — thanks to a spike in the Hudson waterfront submarket. Details emerged last week about the largest such deal, Bank of America’s renewal and expansion in Jersey City that will bring its footprint at 525 Washington Blvd. to nearly 550,000 square feet.
Market reports also pointed to Nokia Bell Labs’ 360,000-square-foot commitment at the HELIX project in New Brunswick, where it will occupy a new ground-up lab and office tower built by SJP Properties. That marked central New Jersey’s largest office deal of Q4.
“New Jersey’s office market rallied in the fourth quarter with two impactful transactions over 100,000 square feet,” said John Obeid, senior research manager for Cushman & Wakefield’s New Jersey region. “We observed numerous direct leases and subleases at Class A properties, serving as a testament not just to tenants reaffirming their commitment to office space despite the lingering impacts of the pandemic, but also the persistent demand for top-tier office space that many markets across the country are experiencing.”
Cushman and others pointed to two subleases in particular, by Marcum LLP and Sompo International, at 340 Mount Kemble Ave. in Morris Township. The firms are taking roughly 74,000 and 53,000 square feet, respectively, under deals with CIT Group, a tenant at a 400,000-square-foot property that Onyx Equities has overhauled in recent years.
Both CBRE and Cushman said the robust leasing volume was offset by the addition of large chunks of space hitting the market. They included 207,000 square feet of sublease space that TD Ameritrade is marketing at 70 Hudson St. in Jersey City, CBRE said, along with a 173,000-square-foot block of direct space put on the market at 33 Washington St. in Newark.
As such, the state’s office market saw negative absorption or an overall decline in occupied space for the year, leading to an uptick in availability. Meantime, CBRE found that the average asking rent of $31.60 remained virtually unchanged from Q3 but was up by 3 percent from the same time last year.
Bank of America expanding to 548,000 sq. ft. at Jersey City’s Newport Tower
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