PARSIPPANY, NJ—Although the number of Fortune 500 companies headquartered in New Jersey dropped below 20, blue-chip tenants in a range of industries are at the forefront of the steady improvement of New Jersey's office market, according to Transwestern's Second-Quarter 2015 Office Market report.

“The continued improvement of the New Jersey office market is reflective of the state's diversification and balance,” says James Postell, partner and city leader at Transwestern. “While the number of Fortune 500 companies headquartered in the state has decreased from 21, several remain extremely active in the state in various locations and industries.” 

With companies such as MetLife Inc., GlaxoSmithKline and New York Life Insurance Co. signing leases during the second quarter, nearly 400,000 square feet of office space was absorbed, marking the fifth quarter of positive net absorption in the past six quarters. Year-over-year, 1.7 million square feet of positive absorption was recorded – the fourth straight quarter where year-over-year absorption exceeded one million square feet.

“Transit-oriented locales such as Jersey City and Woodbridge/MetroPark are performing well,” says Matthew Dolly, Transwestern's research director for New Jersey. “Suburban regions such as Parsippany, Somerset/Interstate 78 East and the often-maligned Route 287 South are competing by investing in capital improvements and improving mass transit options. Conversely, the Bergen North submarket was hit hard by move-outs, and the vacancy rate has doubled from eight percent to 16 percent during the past 18 months.”

Other highlights of Transwestern's second quarter research:

• More than 1.2 million square feet of inventory was added during the past 12 months, with an additional 2 million square feet under construction.
• Asking rents declined slightly to $24.72 for the quarter, compared to $24.91 for the previous quarter, a reflection of the quality space that has been taken off the market.
• Insurance companies are increasing their market presence.
• Life science companies, especially small and mid-sized firms, are active in the market.
• Corporate consolidations and move-outs are still anticipated, especially in the pharmaceutical sector, which has experienced a great deal of change as the market has evolved. 

Correction, 8/4/2015: The photo of Matthew Dolly has been updated from an earlier version of this story, based on a new photo supplied by Transwestern.