New Jersey Office Figures Q4 2023
January 9, 2024 5 Minute Read
The Northern and Central New Jersey office market ended the year with a leasing surge. The fourth quarter in 2023 registered 1.70 million sq. ft. of leasing activity—38% above the five-year quarterly average and the highest quarterly total since Q4 2021. Several large relocation and expansion deals completed throughout 2023 brought the full-year leasing total to 5.08 million sq. ft. only 9% below 2022’s full-year total of 5.60 million sq. ft. Tenants focused on quality space, as 85% of all leasing in 2023 was signed in Class A buildings. Superior location and desirable amenities remained in high-demand by occupiers, but understanding an owner’s financial footing has become a focal point. Tenants want confidence that an owner can deliver on tenant improvement allowances or to operate amenity offerings as costs increase due to elevated interest rates. The addition of large blocks of space in Q4 counterbalanced strong leasing limiting quarterly absorption to positive 47,000 sq. ft. Full-year absorption remained a negative 1.33 million sq. ft. bringing the availability rate up 100 bps annually to 25.0%. The volume of sublease space declined in Q4 reaching 7.41 million sq. ft.—19% of total available space. The market’s average asking rent settled at $31.60 per sq. ft., a 3% improvement from a year ago. As tenants continue to focus on higher quality space, the removal of obsolete office stock through conversion and demolition for alternative use continued in 2023. There was 3.20 million sq. ft. of space removed from office inventory in 2023, which has helped restrict supply in the market.