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News release


JLL Reports New Jersey Class A Rental Rate Rose 7.2% in Past Year

The state’s Class A market recorded approximately 169,040 square feet of negative net absorption in 1st quarter of 2017

EAST RUTHERFORD, N.J., April 17, 2017 — Sluggish leasing velocity combined with additional vacancies generated by consolidations penned the recent storyline for the office market, according to JLL. The state's office market posted less than 2.0 million square feet in completed transactions in the first quarter of 2017, marking the lowest quarterly volume recorded since mid-2009. The overall office vacancy rate subsequently increased to 24.9 percent compared to 24.5 percent at year-end 2016.

"Most of the recent demand was fueled by smaller-sized leases rather than the 100,000-square-foot plus transactions needed to put a significant dent in the state's vacancy rate," said Stephen Jenco, Vice President, Suburban Research with JLL. "However, the diminished leasing volume witnessed in early 2017 is expected to be temporary in nature, as nearly 5.0 million square feet of requirements were navigating the state's office market."

Banking/financial services firms, together with information/technology companies, inked nearly one-half of the completed transactions in the Northern and Central New Jersey office market in the first quarter of 2017. The life sciences sector also stepped up to the plate in early 2017, accounting for nearly 30.0 percent of leasing activity. A leading factor behind this uptick was Bristol-Myers Squibb's renewal of 201,710 square feet at 100 Nassau Park Boulevard in Princeton, which was the largest transaction completed in the office market during the first quarter.

Nearly 915,000 square feet of negative net absorption was registered in the Northern and Central New Jersey office market during the first quarter of the year, which effectively wiped out the 489,900 square feet absorbed in all of 2016. The state's Class A market recorded approximately 169,040 square feet of negative net absorption this quarter, which was a significant improvement from the 932,200 square feet of negative absorption seen during the previous quarter, following a wave of sublease space that overwhelmed the market.

"Most of the demand in the coming months will be focused on the state's Class A sector, which has remained the product of choice for office occupiers for the past several years," said Jonathan Meisel, Managing Director with JLL. "Companies are expected to promote Class A work environments to help retain staff and recruit new employees. Constrained rental rate growth in most of the state's submarkets will also encourage companies to pursue space in amenities-rich Class A buildings."

Class A sublease space reached 4.2 million square feet in the first quarter of the year, but still only accounted for 16.0 percent of available Class A space, compared with a high-water mark of 40 percent of available space in 2002.

The state's office leasing market construction pipeline emptied during the first quarter following the completion of a 45,000-square-foot build-to-suit office building in Morristown for the law firm Fox Rothschild LLP.

Highlights of the first quarter of 2017 include:

  • Northern and Central New Jersey's overall vacancy rate rose to 24.9 percent in the first quarter of the year, representing a 40 basis point increase from the previous quarter. The state's overall vacancy rate was 24.7 percent one year ago.
  • The Northern and Central New Jersey Class A average asking rental rate for direct space increased less than 1.0 percent from the previous quarter to $29.37 per square foot, as new availabilities with higher asking rents continued to boost the average Class A rental rate. Year over year, the state's Class A rental rate rose 7.2 percent from $27.40 per square foot.
  • With an average asking rental rate of nearly $42.93 per square foot in the first quarter, the Hudson Waterfront continued to maintain the highest Class A rent in the office market. Metropark's asking rental rate of $35.01 per square foot represented the highest Class A rent in Central New Jersey. Both figures represent the highest rents ever recorded for each of the two submarkets.
  • While banking/financial services firms initially populated the Hudson Waterfront submarket, other business sectors have continued to establish their footprints in this strategically-located market. In early 2017, Tory Burch leased 93,000 square feet at 499 Washington Boulevard in Jersey City. The fashion designer is relocating several of its business units from Manhattan after receiving a 10-year, $10.7 million Grow New Jersey award this past fall. In addition, L'Oréal USA Inc., which acquired IT Cosmetics LLC last summer, absorbed 60,000 square feet at 111 Town Square Place in Jersey City.
  • Since bottoming out at 15.0 percent in mid-2016, the Metropark Class A vacancy rate ticked higher and reached 19.0 percent by early 2017. Despite these increases, this submarket maintained the second lowest Class A vacancy rate in Central New Jersey (exceeded only by the 18.2 percent vacancy rate registered in the Lower 287 submarket). The addition of 145,430 square feet at 399 Thornall Street in Edison contributed to the higher Metropark Class A vacancy rate in the first quarter. Daiichi Sankyo Co. Ltd. occupied this space prior to consolidating its operations to Basking Ridge in mid-2016.

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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 leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At year-end 2016, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 77,000. As of December 31, 2016, LaSalle Investment Management has $60.1 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit