By Joshua Burd
New Jersey office tenants remained active in the second quarter, especially in higher-end buildings, showing a willingness to commit when the right space is available.
That’s according to research from multiple real estate services firms, which highlighted positive leasing trends despite the backdrop of high overall vacancy. A report by JLL, for instance, said tenants in northern and central New Jersey leased nearly 1.3 million square feet during Q2, a sum that was comparable to the first quarter while helping to push vacancy downward.
The largest deal during the quarter involved PNC Bank’s 91,915-square-foot renewal at Tower Center 2 in East Brunswick, JLL said. Yet it was smaller tenants that accounted for much of the demand — with transactions of 10,000 to 25,000 square feet accounting for nearly 60 percent of leases above 10,000 square feet — continuing a recurring theme in the office sector.
As tracked by JLL, that contributed to the fifth straight quarter of what’s known as net absorption, or the change in occupied space. That helped vacancy in the market fall to 25 percent by midyear, its lowest level since year-end 2022, a trend that also stemmed from a decline in sublease offerings and the removal of outdated buildings from the inventory.
“New Jersey’s office market continues to build momentum,” said Tim Greiner, an executive managing director with JLL and its lead office broker in New Jersey. “Companies are still being selective about where they lease, but they’re making decisions, and that’s translating into lower vacancy, steady rent growth and another quarter of positive absorption. As we move through the rest of the year, we expect demand for well-located, high-quality buildings to remain strong while the limited development pipeline should continue to tighten market conditions.”
A report by Cushman & Wakefield also tracked strong leasing activity in Q2 — 1.6 million square feet, according to the firm’s data — but offered a more tempered account of vacancy in the region. The company tracked 929,245 square feet of negative net absorption during the quarter after four consecutive quarters of positive absorption, thanks largely to several large blocks of space returning to the market.
Rental rates softened modestly during the quarter, Cushman added, with average asking rents declining to $32.29 per square foot. The firm noted that Class A assets continued to command a premium, averaging $36.15 per square foot, while those properties accounted for more than half of all leasing volume.
Among the major deals highlighted by the report were ACE American Insurance’s 117,280-square-foot renewal at 10 Exchange Place in Jersey City, Englewood Health’s 101,325-square-foot sublease at 930-940 Sylvan Way in Englewood Cliffs and Capital Health’s new 72,000-square-foot lease at 275 Phillips Blvd.
“The second quarter reflects more of a pause than a reversal,” said Bill Simoneau, a senior research manager with Cushman & Wakefield. “Large space returns pushed vacancy higher, but leasing activity actually accelerated and continues to favor well-located, high-quality Class A buildings. Companies remain willing to commit to quality space when it supports their long-term workplace strategy.”
New Jersey office market gains traction in Q1 amid Class A leasing, shrinking supply
