Waterfront Corporate Center in Hoboken, which includes 221 River St. — Courtesy: SJP Properties
By Joshua Burd
A lease by a life sciences company in Morristown and a tech firm’s expansion in Hoboken were among New Jersey’s top office deals in the first quarter, as part of a market that saw availability inch downward to start the year.
Those are among the findings of a new report by Newmark Knight Frank, which noted that availability in the region improved slightly to 23.2 percent from 23.3 percent. That was driven by 123,415 square feet of positive absorption in northern and central New Jersey, thanks in part to activity in both the Morristown area and the Hudson waterfront.
“Several midsized deals generated positive momentum in the northern New Jersey office market, despite the fact that there were no blockbuster leases to ring in the new year,” Mark Russo, NKF’s research manager in the state, wrote in the report.
Those deals included a 74,659-square-foot lease by Lonza, a Swiss chemicals and biotechnology company, at 412 Mount Kemble Ave. in Morristown. The transaction follows Lonza’s $5.5 billion acquisition of another firm, Capsugel, which had already been a tenant in the building.
The acquisition prompted Lonza to move from a previous location in Allendale to 412 Mount Kemble, which is two miles from downtown Morristown. Overall positive absorption in the Morristown area submarket totaled 104,817 square feet in Q1, NKF found, causing a drop in availability to 24.4 percent from 25.1 percent.
The market report also highlighted Jet.com’s latest expansion at 221 River St. in Hoboken. The e-commerce company, which was acquired by Walmart in 2016, previously expanded from one to two floors but most recently subleased two additional floors in the building from Pearson Education.
The sublease totaled nearly 80,000 square feet, NKF found. It was also among several positive signs in Hoboken and Jersey City, which had experienced a quiet 2017. Leasing along the Hudson waterfront totaled 304,137 square feet in Q1, which spurred 85,699 square feet of positive net absorption and exceeds the total for the first half of 2017.
Meantime, the report pointed to high-profile investment sales in the Parsippany submarket, headlined by a joint venture’s acquisition of Morris Corporate Center phase 1 and 2. Following transactions involving separate sellers, Vision Real Estate Partners and Rubenstein Partners now control nearly 700,000 square feet of high-end office space, which they now plan to reposition as they’ve done elsewhere in Morris County.
NKF also noted that two large blocks of space came online in Newark during the first quarter, including 238,163 square feet at 540 Broad St. and 169,399 square feet at 707 Broad St. The former is the onetime New Jersey Bell headquarters that is now slated for a full renovation, which will result in 263 apartments and three floors of office and retail space.
The Meadowlands also has a recently added large block of available space at 9 Polito Ave. in Lyndhurst, where Ralph Lauren could vacate 161,848 square feet ahead of a potential move to the ON3 campus in Nutley and Clifton.
All told, NKF highlighted what it called modest improvement in the market.
“With economic conditions widely expected to remain healthy throughout 2018, the northern New Jersey office market will likely see stable to declining availability over the near term, particularly as technology companies continue to grow and building inventory is upgraded,” the firm wrote.