B — September 13 - 26, 2013 — New Jersey — Mid Atlantic Real Estate Journal


N ew J ersey

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CBRE Group, Inc Office market experiences highest mid-year leasing velocity


ADDLE BROOK, NJ — New Jersey’s mid-year leasing velocity showed

Leo Paytas , senior VP, CBRE New Jersey. “With four blocks of space over 100,000 s/f coming onto the market in the second quarter, it’s not surprising that net absorption was down. How- ever, we are extremely encour- aged that mid-year leasing is at 3.57 million s/f — its highest level since 2007, prior to the economic downturn.” With several large trans- actions closing this quarter, the Route 287/78 submarket posted the highest leasing activity at 283,618 s/f. As a result of Spectra Laboratories’ expansion and renewal, the Palisades submarket posted a second quarter leasing veloc- ity of 229,459 s/f, followed by Morristown’s 184,956 s/f. Asking rents decreased $0.20 from the first quarter, closing the second quarter at $24.03 psf. Direct average asking rents decreased by $0.14 to $24.55 psf, while sublet average ask- ing rents decreased $0.71 psf to $18.17 psf The Waterfront remains New Jersey’s highest priced submarket at $31.77 psf, followed by the Princeton submarket at $27.95 psf. The adaptive reuse trend continued on page 3A

of the second quarter’s 1.63 million s/f of transaction activ- ity. Pfizer’s move to 1 Giralda

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Farms and Spectra Labs’ renewal and e x p a n s i o n are clear in- d i cat or s o f their contin- ued commit- ments to the area, with the

s i gn i f i c an t i m p r o v e - me n t o v e r that of last year accord- ing to CBRE Group, Inc. At 3.57 mil- lion s/f, mid- year leasing

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Leo Paytas

David Opper

State’s highly educated work- force being a major influence to remain in New Jersey. Though strong, this activity was not enough to offset the increase in the availability rate as large blocks of space continued to hit the market, thereby increasing the market availability rate to 21.5%, 52 basis points above the prior year. Additionally, the effects of flight-to-quality over the past few years slowed in the second quarter. Class A leasing accounted for 59.3% of leasing velocity in 2Q 2012 and 46.2% in Q2 2013. “While the slowing of the flight-to-quality trend has had a negative effect on forward momentum, the New Jersey of- fice market is still in the midst of an ongoing recovery,” said

velocity is up over 15% from 2012 and over 20% from 2011. Significant transactions in the second quarter included Spectra Laboratories’ 190,000 s/f expansion and renewal at 8 King Rd. in Rockleigh; Pfizer’s 113,616 s/f lease at 1 Giralda Farms in Madison; and Bausch and Lomb’s 90,000 s/f sublease at 283 King George Rd. in Warren. The office market’s momen- tum slowed in the 2nd quar- ter as compared to Q1 2013. Q2 2013 leasing velocity was down 16.2% from last quarter despite strong activity by the pharmaceutical and healthcare industries. The pharmaceutical and healthcare industries, one of the New Jersey’s leading employers, represented 44.8%

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