1100 Campus Road in Plainsboro — File photo
By Joshua Burd
Despite new blocks of space hitting the market, New Jersey saw a long-overdue surge of large office leases in the second quarter — with signs that more are on the way.
Those are among the findings of a new report by Newmark Knight Frank, which tracked high-profile deals in both urban and suburban markets in the state. The activity amounted to more than 2 million square feet of commitments throughout northern and central New Jersey, which kept the availability rate in check as other companies continued to shed space.
The market report highlighted several deals that were counted in NKF’s Q2 statistics:
- Integra LifeSciences Corp. leasing 166,791 square feet at 1100 Campus Road in Plainsboro
- JPMorgan Chase & Co. subleasing 148,521 square feet at 480 Washington Blvd. in Jersey City
- Mars Wrigley Confectionery US leasing 148,460 square feet at 110 Edison Place in Newark
- New Cingular/AT&T renewing for 139,234 square feet at 15 East Midland Ave. in Paramus
- Plymouth Rock Assurance leasing 129,600 square feet at 581 Main St. in Woodbridge
“After several slow quarters, leasing activity bounced back during second-quarter 2018,” Mark Russo, NKF’s research manager for northern New Jersey, wrote in the report. “There are several large tenants in the market that should translate into continued strong demand for the remainder of the year.”
He added, however, that uncertainty over the state budget and proposed tax increases had the potential to slow business decision-making, including making new lease commitments, over the near term. Lawmakers and Gov. Phil Murphy reached a last-minute budget deal over the weekend, which did in fact call for an increase in the corporate business tax and higher taxes for individuals earning at least $5 million.
New Jersey also continued to grapple with large space dispositions, which meant that availability remained unchanged at 23.2 percent, NKF found, despite the large leases in Q2. That included AIG giving back more than 200,000 square feet at 101 Hudson St. and 133,000 square feet that hit the market at Harborside Plaza 5.
But the report highlighted the potential for a major deal at 400 Interpace Pkwy. in Parsippany, where Teva Pharmaceuticals is considering a 345,488-square-foot lease. The state last month approved a $40 million tax credit to encourage the generics company, which is based in Israel, to move its U.S. headquarters and nearly 850 jobs to New Jersey from Pennsylvania.
Teva already has a smaller office at 400 Interpace Pkwy., the former Morris Corporate Center III, which was acquired last year by P3 Properties and is now undergoing major upgrades.
NKF said the lease will contribute to lowering the stubbornly high availability in Parsippany, which saw large blocks of space come online in Q2 at 11 and 20 Waterview Blvd. That fueled 251,614 square feet of negative net absorption, which pushed availability up to 32.3 percent from 30.6 percent, making it the second-highest submarket availability in northern New Jersey behind only the neighboring Morris West/I-80 submarket.