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News release

EAST RUTHERFORD, NJ

JLL Finds Class A Space in Play As Vacancy Rate Slides Lower in 3rd-Quarter 2015

More than 1.2 million square feet absorbed in Northern & Central New Jersey Class A market since beginning of year


EAST RUTHERFORD, N.J., October 8, 2015 — Vacancy rates throughout Northern and Central New Jersey declined to the lowest levels recorded during the past two years in the third quarter of 2015, according to JLL. The state’s overall vacancy rates dropped 40 basis points to 24.6 percent this quarter, while the Class A vacancy rate fell 70 basis points to 24.2 percent. Competitive rental rates have encouraged companies to seek out higher quality space for their operations.

Positive net absorption in Northern and Central New Jersey more than doubled during the past three months, with 853,515 square feet of positive net absorption recorded in the third quarter, compared with 416,000 square feet during the previous quarter. More than 75 percent of the recent absorption recorded this quarter was concentrated in the Class A office market.

“Deal volume has ramped up, resulting in the state’s Class A market posting three consecutive quarters of positive net absorption, totaling more than 1.2 million square feet,” said Robert Kossar, Executive Managing Director and Market Director for JLL’s New Jersey operations. “This is a complete reversal from the 661,100 square feet of negative net absorption witnessed during the same timeframe one year ago. However, the lack of job growth within the professional/business services sector casts a bit of a shadow over the office market’s recovery. The sector shed 6,900 jobs during the past year, the largest loss by any industry in the state.”

Leasing activity throughout Northern and Central New Jersey remained at elevated levels, with space users signing for slightly more than 2.7 million square feet in transactions in the third quarter, just shy of the 2.8 million square feet in deals recorded during the previous quarter. The pharmaceutical/life sciences sector accounted for approximately one-third of the leasing momentum registered this quarter. The largest transactions include Zoetis Inc. inking a deal for the 125,445-square-foot 10 Sylvan Way in Parsippany; and Valeant Pharmaceuticals extending its lease for the 310,000-square-foot 400 Somerset Corporate Boulevard in Bridgewater, while also expanding into the 310,000-square-foot 300 Somerset Corporate Boulevard.

Approximately 346,200 square feet of new construction was underway in the Northern and Central New Jersey office market during the third quarter of 2015.The largest project under construction was a 185,000-square-foot build-to-suit at 67 Whippany Road in Whippany that will house the new global headquarters for MetLife Investments upon its completion in mid-2016.

Highlights of the third quarter of 2015 include:

  • The Northern and Central New Jersey overall vacancy rate decreased to 24.6 percent from 25.0 percent in the second quarter of the year. The state’s overall vacancy rate has remained within a few percentage points of 25.0 percent for at least the past two years.
  • Despite the recent rebound in demand, rental rate growth remained constrained in most of the state’s office submarkets. The average asking direct Class A rental rate dropped to $27.79 per square foot during the third quarter, compared with $27.82 per square foot at mid-year. Year-over-year, the Class A rental rate has declined by less than 1.0 percent.
  • With an average rental rate of nearly $38.76 per square foot, the Hudson Waterfront maintained the highest Class A rent in the office market. The Metropark submarket’s asking rental rate of $31.50 per square foot represented the highest Class A rent in Central New Jersey.
  • The Hudson Waterfront registered 203,800 square feet of positive absorption in the third quarter, nearly matching the 228,370 square feet of positive net absorption posted in the previous quarter. JPMorgan Chase & Co. leased 400,000 square feet at 545 Washington Boulevard in Jersey City. The company received a 10-year, $187.7 million Grow New Jersey award to expand its technology and operations hub in Jersey City, which involved moving 2,150 jobs from offices in Manhattan. In addition, Brown Brothers Harriman signed an 11-year lease for 114,800 square feet at Harborside Plaza 5 in Jersey City. The investment bank is moving its operations from 525 Washington Boulevard. The Hudson Waterfront has maintained the lowest Class A vacancy rate in the state since early 2014.

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JLL is a leader in the northern/central New Jersey commercial real estate market, with nearly 800 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility management, and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work in New Jersey.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.