MCCBLUE at 400 Interpace Pkwy. in Parsippany — Courtesy: JLL
By Joshua Burd
Two northern New Jersey submarkets accounted for more than 90 percent of the absorption in the region’s office market during the third quarter, according to JLL, leading a comeback after a lackluster start to the year.
Researchers with JLL found that the Parsippany and the Interstate 80/Route 23 submarkets accounted for the bulk of Q3 activity in northern and central New Jersey. The locales stood out for large deals by Teva Pharmaceuticals USA, which took 345,500 square feet at 400 Interpace Pkwy., and Ralph Lauren Corp.’s 255,000-square-foot lease at the ON3 complex in Nutley.
The transactions — the largest deals of the quarter — both benefited from state incentives.
JLL found that Teva’s renewal and expansion in 400 Interpace Pkwy., now known as MCCBLUE, helped push the Class A vacancy rate in Parsippany below 31 percent from more than 34 percent at midyear. Still, that figure remained more than five percentage points higher than the state’s Class A vacancy rate of 25.5 percent.
All told, JLL recorded more than 661,000 square feet of positive net absorption in northern and central New Jersey during Q3. The activity followed more than 1.5 million square feet of negative absorption during the first half of 2018.
Overall office vacancy in the region subsequently declined 50 basis points from mid-2018 to 23.6 percent, which was the lowest level in nearly a decade, JLL found.
The firm’s Q3 research also zeroed in on the Hudson waterfront submarket. After trending lower for the past three quarters and falling to 18 percent by midyear, the Hudson waterfront Class A vacancy rate changed course and climbed to 18.6 percent, as consolidations outpaced demand.
More than 111,780 square feet of negative net absorption was registered in the waterfront Class A market during the third quarter, which represented the largest volume of negative absorption in northern New Jersey, JLL said. Contributing to this negative absorption was 114,820 square feet of direct space vacated by Goldman Sachs at 30 Hudson St. in Jersey City.
On the leasing front, JLL pointed to E-Trade Financial Corp.’s new 106,000-square-foot renewal and 26,000-square-foot expansion at Harborside Plaza 2 with Mack-Cali Realty Corp. Meantime, Jet.com also expanded by another 42,000 square feet at Waterfront Corporate Center II in Hoboken, where the e-commerce company now occupies more than 200,000 square feet within two of the three buildings at the complex.
The research also found that the average asking Class A rental rate for direct space in northern and central New Jersey approached $30.50 per square foot in Q3, up from $30.35 at midyear. With an average asking rental rate of nearly $45 per square foot, the Hudson waterfront maintained the highest Class A rental rate in the state.