The recently renovated lobby at Harborside Plaza 2 — Courtesy: Mack-Cali Realty Corp.
By Joshua Burd
A stronger 2018 helped New Jersey’s office market reverse the losses of the prior two years, Newmark Knight Frank found, thanks in part to healthier demand and leasing in some of the state’s key submarkets.
Research by the real estate services firm found that northern and central New Jersey recorded nearly 1 million square feet of positive net absorption during 2018. That activity drove availability down by 80 basis points to 22.7 percent, which is below the five-year historical average of 23.2 percent.
The report highlighted 1.2 million square feet of leasing activity along the Hudson waterfront during the past 12 months, which it said was more than double the amount seen in 2017. The submarket’s largest deal of the fourth quarter was also its largest deal of the year, in which TD Ameritrade leased 207,296 square feet at 70 Hudson St. in Jersey City. The company is relocating from its longtime home just a few blocks away at Harborside 4A.
Other noteworthy deals in the submarket include Sumitomo Mitsui’s renewal and expansion of 36,000 square feet at Harborside 2, where it now leases a total of 111,000 square feet, NKF found. Also during Q4, First Data renewed and expanded by 32,000 square feet at 101 Hudson St. for a total of 80,000 square feet.
The NKF report, written by Mark Russo and Colin Hyde of the firm’s Rutherford office, noted that New Jersey still has major blocks of space hitting the market. After seeing a boost from Teva Pharmaceuticals’ 345,488-square-foot lease during the third quarter, the Parsippany submarket saw availability shoot up to end the year, thanks to nearly 200,000 square feet of sublet space becoming available at 14 Sylvan Way.
The former Wyndham Worldwide building is being vacated as the office is being consolidated into its Orlando headquarters, following the company’s spinoff of its hotel group, the report noted. The newly named Wyndham Hotels & Resorts will maintain its headquarters complex next door at 22 Sylvan Way.
Statewide, NKF said the market ended the year on a stable note, as new leasing activity offset large blocks of space hitting the market.
“After taking a step back during 2017 with rising availability and negative absorption, the northern new Jersey office market has gained ground over the past 12 months,” the report’s authors wrote. “The number of large tenants in the market portends well for leasing over the coming year, though a lack of certainty regarding the future of state incentives may dampen activity.”
Meantime, the fourth quarter included the completion of UNICOM Global’s purchase of the 1.2 million-square-foot former Merck & Co. headquarters in Readington. The California-based IT services company says it now plans to create a sprawling science and technology campus at the site, bringing new hope to what had been one of the state’s largest stranded real estate properties for more than five years.