By Joshua Burd
Office leasing in northern New Jersey hit a two-year high at the end of 2021, thanks in part to large-scale deals by prominent banking and law firm tenants in the state.
A new report by Newmark noted the rebound in leasing activity, which amounted to more than 2.1 million square feet in the fourth quarter. That kept availability stable at 26.4 percent at year-end, as sizable deals helped offset new listings in certain submarkets.
The report cited the impact of New Jersey’s new Emerge incentive program, which fueled high-profile leases that were finalized during Q4. They include a 428,000-square-foot deal in Berkeley Heights by fintech company Fiserv, which was awarded a $109 million tax credit, and a 208,911-square-foot lease by Party City Holdings Inc. at 100 Tice Blvd. in Woodcliff Lake that was driven by a nearly $10 million incentive from the state.
But the year-end flurry also included a lease by Valley Bank, which committed to 119,350 square feet at 123 Speedwell Ave., under a build-to-suit with SJP Properties. Additionally, Chiesa Shahinian & Giantomasi PC is taking 116,122 square feet at 105 Eisenhower Parkway in Roseland, Newmark said, causing availability in the Essex West and Interstate 280 submarket to decline from 26.5 to 23.8 percent during the quarter.
“Gradually improving demand in northern New Jersey’s office market during 2021 resulted in a series of large-block leases closing at year-end,” Colin Hyde, Newmark’s research manager in North Jersey, wrote in the report. He noted that the momentum was offset by negative absorption in Parsippany, Princeton and Metropark, keeping availability flat and asking rents unchanged at around $30 per square foot.
“The market’s outlook is improving, but the spread of the Omicron variant is expected to further delay many return-to-office plans and temper demand in 2022.”
The report said the amount of sublease space on the market in northern New Jersey stabilized at 9 million square feet, but some submarkets fared worse than others at year-end. Hyde pointed to the Metropark submarket, which saw a 240,000-square-foot block listed at 170 Wood Ave. South in the Iselin section of Woodbridge, as well as a full-building, 106,680-square-foot sublet at 45 Waterview Blvd. in Parsippany.
Still, the 7.5 million square feet of office leasing activity in 2021 marked a 25 percent increase from 2020. It was a sign of improvement, even if that volume is still 9.5 percent below 2019 totals.
“Heading into 2022, the emergence of the Omicron variant is expected to weigh against the momentum generated during the second half of 2021,” Hyde wrote. “High vaccination rates, Emerge incentives and the strength of the health care and life sciences sectors will bolster demand in northern New Jersey, keeping both direct and sublet availability relatively stable.”