Pandemic Leads to Increase in Short-Term Renewals While New Leasings Lag
CBRE released its New Jersey Office MarketView today for the second quarter of 2020. The report shows that New Jersey leasing activity in Q2 2020 fell 72% year-over-year and was79% below the five-year quarterly average. Despite the steep decline in leasing as a result of COVID-19 related lockdown and stay-at-home orders, average asking rents wereup slightly to $27.15 per sq. ft., breaking the $27 mark for the first time since CBRE began tracking the metric.
The availability rate rose by 76 basis points (bps) to 20.34% for the second consecutive quarterly increase and marks the first time the rate has been above 20% since Q1 2019.Net absorption was negative for the second consecutive quarter, largely due to an influx of furnished, ready-to-occupy sublease space becoming available to the market. Office-using employment in New Jersey fell by 118,300 positions (-11.7%) with over 80% of those losses coming from professional and business services.
“The COVID-19 pandemic triggered economic uncertainty, which resulted in a steep decline in leasing activity in New Jersey,” saidEd DaCosta, Executive Vice President, CBRE.“Most tenants have taken a ‘wait-and-see’ approach and avoided making real estate decisions, though there was a modest increase in short-term renewals.”
While many market watchers are anticipating a wave of cross-border tenant migration from Manhattan companies creating a hub-and-spoke network of regional offices, this has yet to materialize into any meaningful demand for space in New Jersey. Although thedecline in office-using employment resulted in a spike in sublease availability, there is reason for cautious optimismas there was a modest rebound in employment late in the quarter and the economy is beginning to recover as the state eases restrictions and sees a steady decline in COVID-19 cases.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, 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.
