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News release


Tenants Ink 11.1 Million Square Feet in Leases Across New Jersey in 2016

Information, technology tenants account for one-third of New Jersey office leasing activity for second consecutive quarter

EAST RUTHERFORD, N.J., January 13, 2017 — Leasing velocity downshifted throughout Northern and Central New Jersey according to JLL. The state's office market posted less than 2.1 million square feet in completed transactions in the fourth quarter of 2016, compared to 3.8 million square feet of leases in the third quarter. The drop off in deal volume brought total leasing activity for 2016 to more than 11 million square feet.

Approximately 789,190 square feet of negative net absorption occurred in the Northern and Central New Jersey office market in the final quarter of the year, which eroded some of the 1.5 million square feet absorbed in the third quarter. Despite this negative absorption, nearly 490,000 square feet was absorbed in the office market during 2016, which represented an increase from less than 440,000 square feet of positive net absorption in 2015.

"While the third quarter was defined by the completion of several transactions in excess of 100,000 square feet, a large portion of fourth quarter leasing activity involved transactions below this threshold," said Stephen Jenco, Vice President, Suburban Tri-State Research with JLL. "Moderating demand, combined with a rising supply of sublease space, exerted upward pressures on the overall vacancy rate during the final three months of 2016." He added, "Despite this recent deceleration, demand is expected to rebound in early 2017 as several potential leases are in the pipeline. Furthermore, nearly 5million square feet of tenant requirements were navigating the state's office market."

"Information and technology tenants remained active throughout the Northern and Central New Jersey office markets, which continued the push they started the previous quarter to expand their presence in the state," said Jonathan Meisel, Managing Director with JLL. "For the second consecutive quarter, the sector accounted for one-third of all leasing activity in the state. Proximity to Manhattan and a skilled workforce replenished by graduates from the state's universities are expected to keep New Jersey on the radar screen of growing high-tech companies."

Information and technology tenants accounted for two of the largest deals completed in the fourth quarter of 2016. Qualcomm signed a renewal for 125,470 square feet at Somerset Corporate Center V in Bridgewater. In addition, financial software systems and service provider Fidessa leased nearly 78,000 square feet at 70 Hudson Street in Jersey City.

After ranging near the 3million-square-foot level during the past few years, Class A sublease space eclipsed the 4 million-square-foot mark during the fourth quarter of 2016 in the wake of restructurings and relocations. Despite this increase, sublease space accounted for only 16.0 percent of Class A space, compared with a high-water mark of 40percent of available space in 2002. Novo Nordisk A/S, sanofi-aventis U.S. LLC and Tyco International were among the companies placing blocks of sublease space on the market in late 2016.

On the construction front, Zoetis' new 125,445-square-foot headquarters at 10 Sylvan Way in Parsippany represented the latest project completed in the office market. A 45,000-square-foot build-to-suit office building for the law firm of Fox Rothschild LLP in Morristown remained the only notable construction activity in the leasing market at year-end 2016.

Highlights of the fourth quarter of 2016 include:

  • Northern and Central New Jersey's overall vacancy rate rose to 24.5 percent in the fourth quarter, which represented a 50 basis point increase from the previous quarter. The state's overall vacancy rate was 24.6 percent one year ago.
  • The Northern and Central New Jersey Class A average asking rental rate for direct space increased 3.1 percent from the previous quarter to $26.27 per square foot, as new availabilities with higher asking rents boosted the average Class A rental rate. Year over year, the state's Class A rental rate rose 4.4 percent from $25.17 per square foot.
  • With an average asking rental rate of nearly $42.53 per square foot in the fourth quarter, the Hudson Waterfront continued to maintain the highest Class A rent in the office market. Metropark's asking rental rate of $34.42 per square foot represented the highest Class A rent in Central New Jersey.
  • With 883,370 square feet of negative net absorption, the Hudson Waterfront accounted for the largest volume of negative absorption in the Northern and Central New Jersey Class A office market. Contributing to this negative absorption was 222,990 square feet marketed for lease at Harborside Plaza 5 in Jersey City. Forest Laboratories Inc. formerly occupied this space prior to being acquired by Actavis plc in 2014. Consolidations by Deutsche Bank AG also resulted in more than 200,000 square feet put on the market at Harborside Plaza 1. The Waterfront Class A vacancy rate subsequently climbed to 19.4 percent at year-end 2016 compared with 14.2 percent in the third quarter.
  • Persistent demand for Class A product produced three consecutive quarters of positive absorption in the Monmouth submarket, including 131,100 square feet absorbed during the fourth quarter. The 870,000-square-foot redeveloped Bell Works building at 101 Crawfords Corner Road in Holmdel remained in the spotlight as Jersey Central Power & Light announced plans to move its Central New Jersey regional headquarters there from Red Bank. The utility provider signed a 10-year lease for 64,000 square feet at the Class A office building, which will house nearly 200 employees by mid-2017. In addition, VNA Health Group leased 52,000 square feet at Vonage's campus in Holmdel for its corporate headquarters as part of a partnership with the cloud communications company. The Monmouth Class A vacancy rate retreated more than two percentage points from the third quarter to 27.5 percent.

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JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 1,000 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. JLL is a Fortune 500 company with, as of December 31, 2015, revenue of $6.0 billion and fee revenue of $5.2 billion, more than 280 corporate offices, operations in over 80 countries and a global workforce of more than 70,000. On behalf of its clients, the company provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. As of September 30, 2016, its investment management business, LaSalle Investment Management, has $59.7 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