Vacancy Rates in NJ Industrial, Office Markets Fall, While Rents Go Higher
The New Jersey office market experienced a 120-basis point drop in the vacancy rate, going from 14.3% in the fourth quarter of 2018 to 13.1% at the end of the fourth quarter of 2019, according to a report released by Avison Young.
MORRISTOWN, NJ—The office and industrial real estate markets in New Jersey finished 2019 strong, with both sectors registering declines in vacancy and increases in asking rent.
The New Jersey office market experienced a 120-basis point drop in the vacancy rate, going from 14.3% in the fourth quarter of 2018 to 13.1% at the end of the fourth quarter of 2019, according to a report released by Avison Young. During that same period, office market rents rose $.13 year over year to $30.23-per -square-foot. Net absorption was positive for the seventh-straight quarter.
The industrial vacancy rate dropped to 2.5% when compared to the fourth quarter of 2018 when it was 2.9%. Meanwhile, the historic ascent of market NNN rent has continued its historic rise to $8.71-per-square-foot.
“Investors and tenants alike continue to view the New Jersey office and industrial markets in a positive light,” notes Jeffrey Heller, principal and managing director of Avison Young New Jersey. “Overall fundamentals in both sectors are still strong and the outlook for 2020 remains on an upward trajectory.”
Much of the New Jersey office market can be described as “dated” with a lack of amenities, Avison Young notes in the report. Among the trends to watch for in the future include the introduction of a new wave of private owners that might provide what the brokerage firm terms as “desperately needed capital improvement to an aging office stock.” Avison Young also reports that the emergence of artificial intelligence in the workplace and by landlords will increase efficiency in the office market.
In terms of the red hot industrial market, Avision Young ponders whether the lack of available land will turn out to be the Achilles heel of the market going forward?
The report also notes that there has been an increase in early lease renewals among small-and medium-sized companies who have been looking to get ahead of rising rental rates.