15
Overall vacancy rate
While the gap in the vacancy rate between the overall transit
hub market (which includes urban and suburban hubs)
and the suburban office market had narrowed since 2015,
buildings with access to mass-transit options continued to
boast the lowest vacancy rates through mid-year 2019. The
overall transit hub vacancy rate declined 50 basis points from
2018 to 20.0 percent in mid-2019, while the suburban market
vacancy rate also slipped 50 basis points to 24.0 percent during
the same timeframe. This four percentage point difference in
vacancy rates contrasted with the nearly 11.0 percentage point
discrepancy seen in 2015.
Contributing to the lower suburban vacancy rate had been the
demolition or conversion of older vacant office buildings to
alternative uses. Nearly 1.6 million square feet was removed
from the state’s suburban office market in 2018, with an
additional 2.0 million square feet taken off during the first half
of 2019, including the 1.0 million-square-foot former BASF
campus in Mount Olive, which was no longer marketed for
lease. The suburban office inventory totaled less than 113.0
million square feet in mid-2019 compared to more than 117.0
million square feet two years ago.
The lower overall transit hub vacancy rate witnessed during the
first half of 2019 was fueled by 790,680 square feet of positive
net absorption. Most of this absorption was concentrated in the
urban transit hub market, where the vacancy rate declined from
more than 20.0 percent in 2018 to 19.4 percent in mid-2019. The
lower urban transit hub vacancy rate was attributed to activity
in the Newark market, where 110 Edison Place - Ironside Newark
was completed and added to the office inventory base. 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 recently completed in the Newark submarket
was the General Services Administration’s leasing of 76,290
square feet at 3 Gateway Center.
While the urban transit hub vacancy rate trended lower from
2018 through mid-2019, the suburban transit hub market (which
includes Metropark, Morristown, Princeton and Summit) vacancy
rate climbed 60 basis points to 22.0 percent during this period.
Additional Class B office availabilities in the suburban transit hub
markets were responsible for the latest uptick in the vacancy
rate. With an overall vacancy rate less than 8.0 percent, Summit
registered the lowest vacancy rate among the suburban transit
hub markets, while the Princeton market’s 29.1 percent vacancy
represented the highest vacancy rate.
30.0%
27.5%
25.9%
25.0%
24.0%
22.0%
19.7%
20.0%
20.0%
19.4%
19.5%
18.7%
17.5%
16.9%
16.7%
15.0%
10.0%
2015
2016
Overall Transit Hub Market
2017
Urban Transit Hubs
2018
Suburban Transit Hubs
Mid-2019
Suburban NJ