By Joshua Burd
Vacancy in the northern New Jersey office market grew for four straight quarters in 2020, even as a handful of industries showed the ability to withstand the effects of pandemic.
Those are among the findings of Newmark’s latest market report for the region, which highlighted weakened tenant demand amid the downturn and widespread remote work. The report found that availability now stands at a record 25 percent, up from 21.7 percent at the end of 2019, although asking rents declined only slightly during that time.
According to Newmark, the market saw additional pressure from a wave of new availabilities. More than 2.1 million square feet of new sublet space was listed during 2020, pushing the total inventory in that category to 7.6 million square feet. Those include Sanofi’s 674,000-square-foot listing at 55 Corporate Drive in Bridgewater, which came in April, along with more recent availabilities from Realogy at 175 Park Ave. in Madison and Dun & Bradstreet at 103 JFK Parkway in Short Hills, which total 303,000 square feet.
Despite the rise in sublet space and the addition of 3.3 million square feet of direct space hitting the market in 2020, Newmark pointed to several notable deals that took place. Four of the five largest leases in the market came from the life sciences and health care sectors, including Eisai Inc.’s roughly 300,000-square-foot commitment in Nutley at Prism Capital Partners’ ON3 campus.
The deal, which was announced in August, gave way to additional health and life sciences activity in Q4, Newmark said. They include Bristol-Myers Squibb’s 118,110-square-foot commitment at 9 Roszel Road in West Windsor and Hackensack-Meridian Health’s 80,000-square-foot prelease for a medical office building at ON3.
Rounding out the top five at year-end were Provident Bank’s leasing activity in the Metropark submarket, Englert Inc.’s commitment at 1 Tower Center Blvd. in East Brunswick and Snow Joe’s sublease at 221 River St. in Hoboken, the report found. They contributed to 5.9 million square feet in total deal volume in 2020, which was down from 8 million square feet in 2019.
Mark Russo and Colin Hyde, Newmark’s research team in North Jersey, also pointed to the hope that the state would enact a long-awaited replacement for the Grow New Jersey incentive program, which bolstered office leasing prior to its expiration in 2019. A bill to do so is now awaiting Gov. Phil Murphy’s signature after being passed by the Legislature in December.
“The Northern New Jersey office market experienced an inflection point during 2020 with an abrupt slowdown in leasing and rising availability,” they wrote in the report. “Looking ahead, the vaccine rollout, along with new progress on state incentives, gives reason for optimism.”
