PARSIPPANY, N.J., April 17, 2015 /PRNewswire/ -- As tenants continue to scour New Jersey for the best available options, a flight to quality is buoying the state's office market, according to Transwestern's first-quarter 2015 Office Market report. Despite large move-outs nudging the state's vacancy rate to 16.3 percent, from 16.2 percent the previous quarter, increased leasing velocity resulted in tightened occupancy in 13 of New Jersey's 21 submarkets. Other sectors of the office market are also performing well:
- Class A leasing outpaced vacated space for the fourth consecutive quarter, with more than 2.6 million square feet absorbed during the past 12 months.
- Of New Jersey's 21 submarkets, 17 recorded positive absorption year-over-year, while 13 saw positive absorption quarter-over-quarter.
- Despite a slight quarterly setback, asking rents continued to trend upward when compared year-over-year. At $24.91 per square foot, the first-quarter 2015 average is $0.25 higher than a year ago.
- Since first-quarter 2014, the Parsippany Region in Morris County outperformed all other submarkets, absorbing nearly 640,000 square feet of office space, primarily in buildings that have been upgraded with enhanced amenities.
- Large corporations continue to sell office product in which they have been longtime occupants. In sale-leaseback cases, investors benefit from having a quality tenant in place, while in other cases, the new owner may see value-add opportunities to purchase a well-located, distressed asset at a discounted basis and redevelop it or lease at very aggressive rental rates.
"Recognizing the consistent attraction to quality properties, some office owners are beginning to raise asking rents, even for higher-level Class B space," said Matt McDonough, managing director at Transwestern. "The average asking rents in New Jersey have been flat for years, but select properties in certain markets are able to push above those stagnant rents. That activity, along with the repurposing that removes the functionally obsolete space from the office inventory, will move the overall average rents slightly higher."
"While the anticipated large-scale migration from New York City has not occurred, the market has seen some benefit from New Jersey's continued pursuit of companies from Lower Manhattan, with the biggest advantages being the increased incentives and lower costs," said Matt Dolly, Transwestern's research director for New Jersey.
For more information, contact Dolly at 973.947.9244 or [email protected]. The full report will be published on Transwestern's research page (http://www.transwestern.net/Market-Research/Pages/Research.aspx) when available.
Transwestern is a privately held real estate firm specializing in agency leasing, property and facilities management, tenant advisory, capital markets, research and sustainability. The fully integrated global enterprise leverages competencies in office, industrial, retail, multifamily and healthcare properties to add value for investors, owners and occupiers of real estate. As a member of the Transwestern family of companies, the firm capitalizes on market insights and operational expertise of independent affiliates specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with Paris-based BNP Paribas Real Estate. For more information, please visit transwestern.com and follow us on Twitter: @Transwestern and @TranswesternNJ.
Amanda Ferraro, Beckerman