Several Major Transactions Contribute to More than 1.25 Million Sq. Ft.of New Leasing
New Jersey’s office market showed some positive signs even as most occupiers continue to take a cautious, wait-and-see approach to their real estate requirements, according to CBRE’s Q3 2020 office report.
Overall leasing activity of 1.25 million sq. ft. was a 256% increase from the second quarter, but still well below the quarterly long-term average. However, despite this improvement,the statewide availability rate during the third quarter was up to 20.8%, 50 basis points (bps) greater than the previous quarter and 130 bps greater year-over-year. Additionally, net absorption during Q3 2020 was negative 648,975 sq. ft., mostly due to companies putting more sublease space on the market to cut major expenses as uncertainty over the pandemic and economic recovery continues.
This influx of new space hitting the market, however, did not affect the market’s average asking rents, according to CBRE.In fact, the average asking rent edged up slightly by nearly 1.0% to $27.28 per-sq.ft., an all-time high.
“While New Jersey’s office market showed some signs of improvement during the third quarter, looking ahead wesee more and more space coming on the market and occupiersdownsizing,”saidRemy P. deVarenne of CBRE. “We anticipate companies allowing more work from home flexibility for the foreseeable future.”
During Q3 2020, three new commitments of 100,000 sq. ft. or more, including two in Jersey City, led the overall activity. The market also benefited from a handful of large, long-term renewals. Among the largest transactions completed during the quarter were a 306,471 sq.ft. new lease by Eisai Corporation in Nutley and a 227,853 sq.ft. commitment by American International Group in Jersey City.
On the investment sales side, New Jersey had several major transactions that finalized during the quarter. Among the most noteworthy was the sale of a 10-property, 1.45 million sq. ft. portfolio in Parsippany sold by Mack-Cali and Madison to a group of investors including Onyx Equities, Taconic Capital Advisors, Axonic Capital and Machine Investment Group for $160 million, or $110 per. sq. ft. The quarter’s largest office transaction on a per sq. ft. basis was AIG’s sale to Opal Holdings of 194 Wood Ave. South for $140 million, or $297 per sq. ft.
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.
