NJ TRANSIT HUB PERSPECTIVE | MID-YEAR 2019
Newark
With an office inventory of nearly 12.2
million square feet, Newark comprises
the second largest transit hub market in
Northern and Central New Jersey after
the 18.3 million-square-foot Jersey City/
Hoboken market.
After approaching 26.0 percent at the end of 2018 in the
wake of additional vacancies and moderating demand, the
Newark overall vacancy rate had since trended lower during
the first half of 2019. By mid-year, the overall vacancy rate
had retreated below 24.0 percent. The lower vacancy rate
was fueled by more than 762,380 square feet of positive
net absorption, which represented the largest volume of
absorption in the state’s transit hub markets during the first
half of 2019. A leading factor behind this surging absorption
was the completion and addition of 110 Edison Place - Ironside
Newark to the office inventory. Mars Wrigley Confectionery
US occupies nearly 40.0 percent of the 402,530-square-
foot building for its U.S. headquarters. Among the largest
transactions completed in the Newark submarket was the
General Services Administration’s leasing of 76,290 square feet
at 3 Gateway Center during the second quarter.
On the investment front, a joint venture consisting of Garrison
Investment Group, Axonic Capital, Taconic Capital Advisors and
Onyx Equities recently acquired 1, 2 and 4 Gateway Center in
Newark, which represented one of the Garden State’s largest
office sales in recent years. The purchase brings 1.6 million
square feet of office space under a common ownership and
paves the way for the spending of between $30.0 and $50.0
million over the next two years to modernize the complex’s
concourse and tenant spaces. In addition, Essex County
Government purchased 320 and 321 University Avenue from
Mack-Cali Realty Corporation for $26.0 million, or $176 per
square foot. The two office buildings, totaling 147,410 square
feet, had formerly been vacant, and will be occupied by the
new ownership.
Despite the Newark submarket recording a Class A vacancy
rate below 17.0 percent compared to the 18.3 percent average
Class A vacancy for the state’s transit hub markets, office
occupiers had been challenged to locate existing amenity-
packed modern Class A buildings to accommodate their
operations near Penn Station. However, the recent purchase
of three of the Gateway Center buildings and proposed
multimillion-dollar modernization plans are expected to
put this mass-transit accessible complex on the radar screen
of tenants with space requirements.
Net new supply
With a population of more than 282,000 in 2018, Newark is
the largest city in New Jersey and one of the most densely
populated cities in the state. A majority of the office buildings
are in close proximity to Newark Penn Station. This major
transportation hub provides bus and commuter rail service
via New Jersey Transit, Amtrak, PATH and Newark’s Light Rail
system. With 28,140 daily boardings, Newark’s Penn Station
maintains the largest volume of passenger traffic in the state.
Newark is also home to several educational institutions
including Rutgers- Newark, Seton Hall University’s Law School
and the New Jersey Institute of Technology.
Net absorption
total vacancy
26.0%
1,200,000
25.0%
800,000
24.0%
400,000
23.0%
0
22.0%
-400,000
-800,000
21.0%
2015
2016
2017
2018
Mid-2019
20.0%