New Jersey Experiences Increasing Demand for Office and Industrial Assets in Q2 2022
Jayden Lapin-Tatman • 7/11/2022
“We’ve seen increasing demand in the New Jersey market as a whole this quarter, causing lower vacancy rates across the office and industrial asset classes,” said John Obeid, Senior Research Manager for the New Jersey region. “A trend of converting outdated office buildings has also contributed to lower office vacancy rates, while severe constraints on New Jersey’s industrial supply have led to increased construction from Q1.”
The New Jersey office market saw an increase in leasing activity, with heightened demand during the second quarter bringing the mid-year 2022 leasing activity to 4.4 million square feet, up 36.3% from the same period last year. Because of this, the vacancy rate saw slight improvement at 20.4%, down 40 basis points from last year. In Q2, there were seven new transactions greater than 75,000 square feet, compared to three in Q1.
Leasing activity in the warehouse asset class fell to 4.8 million square feet as occupiers struggled to find space for lease. Morris County and Exit 8A captured most of the space demand, together accounting for 40.1% of the overall leasing activity, driven by significant transactions by List Logistics in Flanders and Best Buy in Monroe. The vacancy rate remained historically low at 1.8%, with pricing continuing to rise. The average direct asking rent for warehouse space reached $13.96 per square foot, up 36.6% year-over-year.
“The shortage of existing big-box Class A space resulted in a new wave of developments this quarter. The construction pipeline remains robust, with 41 projects totaling 13.6 million square feet under construction,” added Obeid.
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