New office leasing velocity for the first three months of 2011 reached the highest first-quarter velocity recorded since 2007, according to findings in CB Richard Ellis’ First Quarter 2011New Jersey Office MarketView Report. The Waterfront and Route 287/78 submarkets were the standout performers,representing half of the state’s combined market activity. Additionally, after four quarters of continual decline, average asking rents increased $0.34 to $24.46 per square foot. Overall New Jersey office leasing activity in 1Q 2011 was down, however, compared to 4Q 2010.
The Waterfront area recorded 409,577 square feet of activity, while Route 287/78 registered 330,068 square feet of velocity and Princeton accounted for 249,923 square feet. The Waterfront has seen a healthy decline in the availability rate from 11.8 percent to 8.4 percent since the second quarter of 2010, according to the report.
“The Waterfront submarket is New Jersey’s big success story, experiencing consistent tenant demand over the last four quarters with both strong leasing and renewal activity,” said Jeff Hipschman, senior managing director, CBRE, and head of its New Jersey operations. “The Waterfront is not only considered an alternative to New York City, but also a primary location option for many corporations.”
Beyond the Waterfront, the high level of availability continues to pose a challenge in the marketplace. As activity shows improvement, new space continues to become available, offsetting reductions in available space. Despite the uptick in leasing, renewal and user-buyer activity in the last five quarters, the total available square footage has not yet seen a decline. At the close of the first quarter, there was 33.96 million square feet of office product available. At the end of 2010, 33.93 million square feet was on the market, and year-end 2009 posted 33.98 million square feet of available space.
Renewals continue to fuel the leasing activity, with nine of the top 15 transactions for the quarter renewals or renewal/expansions. That performance brought the total square feet of office space renewed to 1.3 million square feet, accounting for 47.1 percent of the overall market activity. Submarkets with renewal activity over 300,000 square feet included Route 287/78 and the Waterfront. In addition, overall renewal activity passed the 1.2 million square foot mark for the third consecutive quarter.
“While challenges remain, our markets continue to show signs of improvement,” stated Hipschman. “Companies are choosing to remain in New Jersey and they have been hiring. According to the NJ Dept of Labor, long-term job figures show growth of 17,200 private sector jobs over the past 12 months, a trend of continuing improvement over prior years and one that we expect to continue.”
Average asking rents experienced positive improvement in the first quarter of 2011, with a $0.34 bump up to $24.46 per square foot. The average asking rent in northern New Jersey totaled $25.14 per square foot, a $0.46 increase over the fourth quarter of 2010, while central New Jersey had a $0.04 increase to $23.41 per square foot overall. Submarkets with the highest average asking rents in the quarter included Chatham/Millburn/Short Hills at $45.42 per square foot; Palisades at $29.64 per square foot and Morristown at $29.07 per square foot.
Net absorption remained in negative territory for the first quarter of 2011, coming in at negative 29,885 square feet, down slightly from last quarter’s positive 5,338 square feet and a 367,142 square foot improvement over the first quarter of 2010.
Top transactions in the first quarter included Verizon’s 210,254 square foot renewal at 30 Independence Blvd. in Warren; Fidelity’s 181,225 square foot lease at 499 Washington Blvd. in Jersey City; a 137,076 square foot renewal by Bank of Tokyo-Mitsubishi for space at 3 Harborside in Jersey City; a 126,489 square foot renewal inked by Quality Technology Services at 95 Christopher Columbus Dr. in Jersey City; and a 122,212 square foot new transaction with Celgene leasing space at 300/400 Connell Dr. in Berkeley Heights.
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com