The Warren Corporate Center campus in Warren — Courtesy: Vision Real Estate Partners
By Joshua Burd
A flurry of blockbuster leases propelled New Jersey’s office market in the third quarter, fueling positive momentum despite a handful of high-profile space dispositions.
Those are among the findings of Newmark Knight Frank’s latest market report for the region, which highlighted four leases exceeding 100,000 square feet that were signed during the quarter. The largest among them was Everest Reinsurance Co.’s previously announced, 315,000-square-foot lease at the Warren Corporate Center campus along Interstate 78, the site of a major repositioning effort by Vision Real Estate Partners and Rubenstein Partners.
The three other deals included:
- Samsung’s 235,057-square-foot renewal at 85 Challenger Road in Ridgefield Park, which is owned by KABR Group
- CIT Group Inc.’s 200,000-square-foot lease at 340 Mount Kemble Ave. in Morris Township, which is owned by Onyx Equities and PCCP LLC
- PTC Therapeutics’ 185,000-square-foot lease at 311 Pennington Rocky Hill Road in Hopewell, which is owned by Bristol-Myers Squibb
The four deals led the pack during a quarter in which office tenants absorbed about 279,300 square feet in northern and central New Jersey, NKF found. The activity brought availability down from 22.1 percent at midyear to 21.8 percent through Q3, its lowest level in more than a decade, while rental rates ended the quarter at $29.65 per square foot on average.
The activity helped soften the blow of large availabilities that continue to hit the market, NKF wrote. For instance, central New Jersey saw 177,224 square feet of negative net absorption during Q3, thanks in part to a 230,000-square-foot sublet that became available at Vonage’s headquarters at 23 Main St. in Holmdel.
The market report also cited a large block at 230 Knightsbridge Road in Piscataway, where ownership has listed 270,000 square feet previously occupied by AT&T. In North Jersey, Newell Brands announced that it was moving its headquarters back to Georgia, giving back nearly 100,000 square feet at 221 River St. in Hoboken.
“The third quarter was marked by mixed economic signals, as an active local market coincided with global economic concerns and the expiration of Grow New Jersey incentives program,” NKF’s Mark Russo and Colin Hyde wrote in the report. “So far, the Northern New Jersey office market has exhibited resilience with robust demand from financial services and life sciences tenants and the lowest availability in more than a decade.”
Russo also noted that the Everest and CIT deals signaled a strengthening demand in Somerset and Morris counties, respectively. Other Q3 deals in the Somerset/I-78 submarket included Hikma Pharmaceuticals taking 44,267 square feet at 200 Connell Drive in Berkeley Heights and PS&S leasing 44,000 square feet at 3 Mountainview Road in Warren.
CIT’s lease in Morris Township, which was fueled by a $22.2 million Grow New Jersey tax credit, comes as Onyx and PCCP carry out a sweeping overhaul of the former AT&T campus at 340 Mount Kemble. Elsewhere in Morris County, Wyndham Hotels and CohnReznick committed to a combined 150,000 square feet during Q3 at 14 Sylvan Way in Parsippany.