Office Rents Climb to Near New Record Highs in New Jersey
The Third-Quarter 2017 Office Market Report reported that rents for office space in New Jersey are steadily rising and nearing an all-time high, based upon a published report put out by Transwestern.
The Monmouth East submarket has experienced a vacancy rate improvement of 700 basis points since year-end 2015, becoming one of the strongest submarkets in Central New Jersey.
The market’s overall average asking rent increased by 44 cents quarter-over-quarter, the largest quarterly increase in rents since fourth quarter 2015.
Since 2015, office rents have grown by 9%, representing the largest two-year increase since 2001, placing the market’s current average asking rent at $26.86 per square foot.
This represents the second-highest quarterly average of all time.
Much of the growth has come to the state by way of actual economic activity and also the incentives coming from the State of New Jersey’s Grow NJ tax credits, which has been successful in attracting and maintaining New Jersey’s core commercial businesses and service companies. Companies recognize the logistic value of New Jersery’s prime location along the central eastern seaboard, especially along the I-95 Corridor.
Also, as office rents in general are rising, the dollar-cost-average of moving large tranches of business operations would risk disrupting their ongoing business pipeline by implementing major moves. The Grow NJ program is credited with retaining the French pharmaceutical firm Sanofi S.A. in Bridgewater after it was awarded approximately $40 million in tax credits to help reduce occupancy costs at its U.S. headquarters.
Other transactions included Billtrust, which signed the largest new lease in the Princeton area after being awarded Grow NJ tax credits to create 200 new jobs in Lawrenceville, and Nuts.com announced it will create a 24,000-square-foot high-tech workspace in Jersey City, which is expected to create over 150 new jobs.