By Joshua Burd
Office leasing in southern New Jersey bounced back in a major way in the third quarter, notching a 44 percent increase from the previous quarter in the market’s three core counties.
Those are among the findings of Wolf Commercial Real Estate’s third-quarter market report, which tracked roughly 365,224 square feet in leasing volume in Burlington, Camden and Gloucester counties. That led to about 195,000 square feet of positive absorption, bring overall vacancy in the market to about 10.65 percent
That activity was driven by small and midsized business expansion, WCRE said after surveying roughly 17.5 million square feet of space in the three counties. With the strongest leasing activity for any period this year, Q3 provided a needed rebound from a slowdown that started late last year in continued into early 2016.
Meantime, WCRE said, large corporate deal flow appears to have slowed due to political uncertainty.
“The Brexit vote was something of a shock to the system during the second quarter, but this region showed its resilience and the strength of its fundamentals,” Jason Wolf, founder and managing principal of WCRE, said in a prepared statement. “The upcoming election means more uncertainty in the near term, but the overall tone is one of cautious optimism.”
The largest deals of the quarter include:
- Horizon Blue Cross Blue Shield renewing 87,460 square feet at 250 Century Parkway in Mount Laurel
- Navien relocating to 15,100 square feet at 50 Twosome Drive in Moorestown
- Earp Cohn renewing a lease for 12,000 square feet at 20 Brace Road in Cherry Hill
WCRE also noted that, with Burlington County vacancies tightening up, many larger vacancy opportunities are also shifting toward the Camden area. Camden County also happens to be the site of the most high-profile activity — specifically, along the Camden waterfront — where American Water Works in July announced plans for a new headquarters in the city.
The utility said it will occupy a 222,376-square-foot space to be built by Liberty Property Trust at One Water Street, thanks in part to a $164 million tax credit from the state. WCRE researchers wrote that American Water currently has its headquarters in Voorhees and occupies additional space in Mount Laurel, Haddon Heights and Cherry Hill, with plans to consolidate in Camden.
“While this news may create a temporary setback to the surrounding submarkets, officials hope that the investments in Camden will eventually have a revitalizing effect on Southern
New Jersey,” the researchers wrote. “The hope is that as rents continue to increase at a substantial pace in Philadelphia’s Central Business District and throughout the southeastern Pennsylvania suburbs, Southern New Jersey’s lower-than-market-average rental rates, especially for Class A space, may become increasingly attractive to tenants priced out of those areas.”
Other office market highlights from the report include:
The quarter saw a slight decrease in prospecting, with about 225,000 square feet of lease deals in the pipeline and expected to close in the near term.
Average rents for Class A and B office space remained unchanged in the quarter for both triple net and gross leases, hovering around $10 to $14 per square foot and $20 to $24 per square foot, respectively.
On the sales and investment side, properties totally about 416,050 square feet with more than $52 million in total value were traded.
