The New Jersey office market experienced a setback during the fourth quarter of 2022 as downsizing among tenants contributed to rising availability.
The availability rate increased 70 basis points to 22.8%, reaching its highest level in more than a year. Net absorption amounted to negative 1.3 million square feet (MSF) caused by major space dispositions in the Hudson Waterfront, Newark, East I-78 and West I-78 submarkets. Although this did not translate into positive net absorption, the market showed an improvement in leasing activity, driven in part by demand for smaller spaces in the highest quality buildings. The 2.9 MSF of leasing activity recorded during the fourth quarter brought the year-end total to 10.4 MSF, an increase of 25.9% from 2021 and 7.4% from 2019. Asking rents were flat over the quarter at $29.70/SF and up 2.0% from one year ago. Concession packages offered by landlords remained strong, while recent rent hikes have been limited to trophy buildings, which continue to outperform the overall market.