The Northern New Jersey office market showed signs of stability and improvement at the end of 2019 positing positive net absorption, lower availability and higher asking rents, according to a report released by Newmark Knight Frank.
The brokerage firm reports that the fundamentals of the Northern New Jersey are poised to continue to improve steadily entering 2020.
The office market in Northern New Jersey ended the year with stable conditions as availability declined slightly from 21.9% to 21.8% during the fourth quarter. Over the past 12 months, more than 600,000 square feet in net absorption was recorded while availability fell by 60 basis points.
The average asking rent in the Northern New Jersey office market continued to rise, increasing by 1.4% over the past year, though some submarkets are seeing stronger growth, Newmark Knight Frank states in its report. Total inventory shrank by 1.0 million square feet in 2019 in Northern New Jersey as obsolete buildings are getting torn down.
The report notes that several submarkets are seeing rents rising faster than the inflationary growth rate typical for most of the market. With the lowest availability rate in Northern New Jersey at 16.7%, Bergen Central saw asking rents for Class A space rise by 6.4% over the past year. In addition to low availability, building upgrades and new amenities, such as those recently completed at Glenpointe in Teaneck, are allowing landlords to start commanding higher rents, Newmark Knight Frank states.
Another area seeing strong rent growth is Newark, where Class A asking rents rose by 4.3% over the past year. Contributing to the rent growth, Downtown Newark is undergoing a revitalization exemplified by the recent completion of Ironside Newark. The development, which is an adaptive reuse of a former warehouse, added 270,000 square feet of new office space to the market in 2019. Meanwhile, the neighboring Gateway Center buildings are undergoing major renovations. These recent developments are helping to improve Newark’s image which is starting to give landlords more pricing power, the report states.