777 Scudders Mill Road in Plainsboro
By Joshua Burd
Life sciences firms accounted for the two largest office leases of the second quarter in northern and central New Jersey, in a market that remains stable despite a slight uptick in availability.
Researchers with Newmark Knight Frank said as much in a new market report, which highlighted a transaction by IQVIA at 77 Corporate Drive in Bridgewater. The move, which is tied to the 2016 merger of Quintiles and Parsippany-based IMS Health, involved a 115,500-square-foot sublease at the former Sanofi-Aventis campus near interstates 287 and 78.
A second significant lease of the quarter saw Genmab take 90,000 square feet at 777 Scudders Mill Road in Plainsboro, NKF said. The biotech firm, which is relocating from Carnegie Center, is moving to the former Bristol-Myers Squibb building with the help of a 10-year, $12.8 million tax credit under the now-expired Grow New Jersey program.
The IQVIA and Genmab deals were part of more than 1.6 million square feet of leasing during Q2, according to NKF. The firm also tracked six other commitments that exceeded 40,000 square feet, including the U.S. government taking 76,290 square feet at 3 Gateway Center in Newark and Bohler Engineering leasing 64,000 square feet at 30 Independence Blvd. in Warren.
All told, the real estate services firm found that availability increased by 20 basis points to 22.6 percent. The figure is still down from 23.5 percent at midyear 2018, NKF said, as average asking rents increased slightly to $29.52 from $29.23 per square foot.
“The Northern New Jersey office market continues to exhibit incrementally improving fundamentals with availability trending down over the past five years,” Mark Russo, NKF’s research manager in North Jersey, wrote in the market report. “Nearly 400,000 square feet in pending deals should translate into positive absorption during the second half of 2019.”
Those deals include a potential lease by CIT, which is considering leasing 215,000 square feet in Morris County after being approved for a $22.2 million Grow New Jersey award last month. To that end, Russo said the defunct incentives program should still help transaction volume in the months ahead, but its long-term impact is less clear, given that Gov. Phil Murphy and state lawmakers have been unable to agree on a replacement program.
“Applications received prior to the deadline will still be processed, meaning that more awards should be issued in the coming months,” Russo wrote. “Therefore, the impact will not likely be felt in terms of office demand for the remainder of the year. A replacement program with a relatively low cap on annual awards has been proposed but not legislated to date.”
The NKF report also highlighted ongoing speculative construction projects in Newark and Hoboken, which show developers’ confidence in the state’s urban markets. Edison Properties’ Ironside Newark, the well adaptive reuse of a historic warehouse building will add 272,760 square feet of high-end office space to downtown Newark when it is delivered.
The project’s office component is more than 70 percent leased to companies including Mars Wrigley Confectionary US, Pearlman & Miranda and others, NKF said. Meantime, Toll Bros. broke ground during the quarter on 1000 Maxwell, a mixed-use project that will bring 125,000 square feet of new office space on the north end of Hoboken.
The market report noted that, despite healthy leasing activity, several large dispositions caused the uptick in availability during Q2. Four blocks exceeding 100,000 square feet have hit the market in northern and central New Jersey, including 250,000 square feet at 200 Plaza Drive in Secaucus that is occupied by Ernst & Young.