CBRE recently published two real estate reports focusing on the office and industrial sectors in northern and central New Jersey during the second quarter of the year.
In the office market, leasing activity totaled 831,000 square feet in Q2, marking a 31% decrease from the five-year average and a 45% drop from Q2 2023. Notably, there were no office leases exceeding 100,000 square feet for the entire quarter. Class A leasing also decreased to 76% of all lease activity, down from 82% in nine of the last 10 quarters. However, top-tier buildings, representing only 9% of inventory, experienced a 340 basis point decrease in availability to 21.5%.
Despite this positive trend, negative absorption of 621,000 square feet contributed to a 40 basis point increase in availability to 24.9%. This continues a pattern of six consecutive quarters where availability has remained within 50 basis points of the all-time high of 25%. Other key data points include an asking rent of $31.55 per square foot in Q2, stable over the past six quarters, and sublease space growth accounting for 19% of total available space.
In contrast, the industrial market in northern and central New Jersey saw growth in Q2, with 5.9 million square feet leased, a 16% increase from the previous quarter. Third-party logistics firms, particularly smaller tenants, drove this growth, representing 47% of the market’s total leasing activity and contributing to an absorption rate of 1.7 million square feet.
Although occupancy increased for the first time since Q1 2023, the addition of 2 million square feet of new product pushed the vacancy rate up by 10 basis points to 5%. This was the slowest increase in vacancy since Q2 2023. Subleasing reached its highest level since Q3 2020, at 6.5 million square feet. Average asking rent for Class A space remained stable at $19.40 per square foot, while Class B and Class C properties saw a 3% increase to $16.62 per square foot.