By Joshua Burd
Two life sciences companies have taken a combined 215,000 square feet in Morris and Somerset counties, accounting for New Jersey’s largest new office leases during a positive first quarter.
Those are among the findings of a new report by Newmark Knight Frank. In the larger transaction, biotechnology firm Celularity signed a full-building, 147,000-square-foot lease at 170 Park Ave. in Florham Park, marking the largest lease to date in northern New Jersey.
The company, a spinoff of Celgene Corp., contributed to 231,578 square feet of net absorption in the Morristown submarket, NKF found, noting that availability there is down nearly 3 percent from a year ago. Celularity’s new home is part of the mixed-use campus known as The Green at Florham Park, where its neighbors will include BASF and Summit Medical Group.
The first quarter also saw Amarin Corp. lease 67,747 square feet at 440 Route 22 in Bridgewater, NKF reported. Owned by American Equity Partners, the newly renovated building has now seen 140,000 square feet of leasing activity over the past 12 months, drawing the pharmaceutical company from its existing location at 1430 Route 206 in Bedminster.
NKF touted the life sciences leases as a positive sign for one of the state’s core industries and for the office sector. Northern and central New Jersey began 2019 with its third consecutive quarter of strong positive absorption, the real estate services firm found, with nearly 580,000 square feet of occupancy gains during Q1.
Availability, while still high relative to the national office market, recorded a 10-year low with an average rate of 22.2 percent.
The report also highlighted a flurry of activity among midsized users, which further contributed to the positive absorption. The market recorded 16 leases between 30,000 and 60,000 square feet during the first three months of 2019, NKF found, accounting for the largest number in that size range in more than two years and totaling more than 700,000 square feet in transaction volume.
“The Northern New Jersey office market began 2019 on a strong note with net absorption continuing its positive streak,” Mark Russo, NKF’s research manager in New Jersey, wrote in the report. “The growth of existing business and attraction of new businesses from neighboring states will be key to sustaining this momentum.”
Russo also noted that the state’s expiring incentive programs — including Grow New Jersey, which sunsets on June 30 — loom large for the market’s continued performance. The programs have come under increased scrutiny under Gov. Phil Murphy, who hopes to scale down and refine the incentives and whose administration is now investigating potential abuse by past tax credit recipients.
Meantime, NKF’s report highlighted other top leases from Q1, including Ricoh USA’s 55,983-square-foot commitment at 2 Gatehall Drive in Parsippany and Lerner David’s 34,373-square-foot relocation to 20 Commerce Drive in Cranford. The firm also recapped several investment sales during the quarter, which were led by the high-profile sale of buildings 1, 2 and 4 within Newark’s Gateway Center complex, accounting for more than 1.6 million square feet.