New Jersey’s office market continued on a descending trajectory as COVID-19 surged during the colder months and the overall economy began to deteriorate, according to CBRE’s Q4 2020 New Jersey Office MarketView. As a result, office leasing for Q4 was muted, posting just 909,000 sq. ft. of activity, 27% lower than the previous quarter. Office leasing for the year finished at 3.51million sq. ft., 47% below the five-year annual average. Additionally, the market saw just 296,000 sq. ft. in renewals during the fourth quarter, a considerable decline from the 2.0 million sq. ft. posted during the previous quarter.
Among the top leases during Q4 2020 were Bristol Myers-Squibb’s 117,000 sq.ft. commitment at9 Roszel Road in West Windsor and Marshes’ 54,376sq.ft. lease at 445 South Street in Morristown. Provident Bank had the third largest lease in Q4, taking 42,000 sq. ft. at 111 Wood Ave South in Iselin.
“New Jersey’s office market has not been immune to the global pandemic and subsequent economic decline,” said CBRE Executive Vice President Ed DaCosta.
As a result of lackluster leasing activity, the market posted negative net absorption for the fourth consecutive quarter. During Q4, the market recorded 2.5 million sq. ft. of negative absorption—a record low, which broke the previous low mark of 2.4 million sq. ft. set in Q1 2008. Consequently, the availability rate increased significantly over Q4 2020 and reached a new high of 22.4%, topping the previous record of 21.8% set in Q3 2015.
In contrast, New Jersey’s average asking rents reached $27.37 persq.ft., up 3.2% from the end of 2019 as landlords continued to stand firm on asking rent pricing while providing more incentives through concession packages for larger deals.
On the investment sales front, the market posted $420.6 million in sales, a decline from the $605.3 million in the previous quarter. However, the average price per sq.ft. of office properties sold in Q4 was $175 persq. ft., 6.4% higher than Q3 2020.
The largest sales in Q4 included Plymouth Rock’s $61 million acquisition of 581 Main Street in Woodbridge from Mack Cali; KABR Group’s $60 million sale of 85 Challenger Road in Ridgefield Park to Asia Investment Management of Korea; and the three-building sale of 200 and 400 Crossing Boulevard in Bridgewater and 600 Corporate Drive in Lebanon, totaling 740,000 sq. ft. by Piedmont Office Realty to Alexander Property Holdings for $130 million.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
