By Joshua Burd
A new market report by JLL found that office vacancy in southern New Jersey is at an all-time low, following a first quarter that saw the region outperform greater Philadelphia as a whole.
The real estate services firm, which has an office in Cherry Hill, said overall vacancy in South Jersey is 11 percent — down from 17 percent in 2013 — while Class A vacancy has dropped to 6.5 percent. During Q1, the region posted 91,675 square feet of positive net absorption, with tenants moving around submarkets such as Mount Laurel, Marlton and Moorestown.
Notable recent deals tracked by the firm included Marshall Dennehey’s 44,000-squae-foot lease at 15000 Midlantic Drive, Abundant College relocating and expanding to 19,500 square feet at 2 Greentree and Harbor Linens occupying 18,000 square feet at 4B Eves Dr., the report said. The activity has helped pushed average gross asking rents up from around $20 per square foot to just under $22 per square foot.
“With those tenants moved into large spaces, few large blocks of Class A space remain in Southern New Jersey,” researchers wrote, noting that there only five spaces over 25,000 square feet and only two over 50,000 square feet for tenants with major space requirements. “Tenants seeking quality space in the near future will need to wait for a build-to-suit option to complete or select from the ample Class B inventory and extensively renovate it.”
But construction activity in suburban South Jersey remained quiet, as new development continues in Camden. JLL pointed to new office buildings by Subaru of America and American Water Works that are slated for completion in the city in late 2017 and mid-2018, respectively.
The city is now set to become home to another new office building, an 18-story waterfront tower to be shared by Conner Strong & Buckelew, NFI and The Michaels Organization. Each project is benefiting from large tax credits that are meant to encourage the companies to bring new investment and jobs to the city.
The JLL report also said the new waterfront projects “haven’t materially influenced the existing office market in Southern New Jersey,” but said that could change if TD Bank proceeds with plans to consolidate operations in Camden.