Like Bruce Springsteen, North Jersey office landlords are “waitin’ on a sunny day.”
Office vacancies across North and Central New Jersey climbed to 25.8 percent in the first quarter, according to JLL data first reported by NorthJersey.com. That’s up from 24.5 percent at the end of last year and the highest mark since 2009, when the Great Recession drove vacancies to 26 percent.
Broken down by subregion, North Jersey’s 101 million square feet of inventory was 26.8 percent vacant at the end of the first quarter, while Central Jersey’s 67 million square feet had a vacancy rate of 24 percent.
Office occupancy across both regions slowly recovered in the decade after the financial crisis, with vacancies dropping to 21 percent in 2019 before the pandemic reversed the trend again.
JLL’s report referenced “headwinds” that continued to drag down the regional office market in the first quarter, such as rising interest rates and last month’s banking turmoil. Tenant consolidation also “restrained demand” for another 1.8 million square feet of offices that came to market during the quarter, the report said.
That restrained demand stems in part from the same existential question facing office markets nationwide: What does the future of work look like?
“Companies are still trying to feel out their return to office, how much space they’re going to need going forward,” Stephen Jenco, JLL’s director of New Jersey research, told NorthJersey.com.
The quarter’s biggest lease was signed at M Station West, SJP Properties’ planned 375,000-square-foot office and retail building next to Morristown’s NJ Transit station. Drugmaker Sanofi took 260,000 square feet there, where it will relocate from its Bridgetown digs in late 2024 and early 2025.
It’s one of two buildings in SJP’s M Station complex. The first, the 110,000-square-foot M Station East, is fully leased to Deloitte.
— Holden Walter-Warner
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