South Jersey office market healthier but vacancy rates still high

The South Jersey office market is starting to show signs of improvement though the vacancy rate remains high, according to a new midyear report.

During the second quarter, 540,000 square feet of leases were wrapped up in South Jersey. Of those deals, 185,000 square feet were new leases, which translated into a 20 percent increase in new activity compared with the second quarter of last year, according to a market update by Wolf Commercial Real Estate.

A range of sectors were represented in the lease transactions, including health care, computer services, insurance, engineering and defense contracting.

Some new: Regus signed on for 15,190 square feet at Garden State Towne Center, Baratz & Associates took 12,000 square feet at 7 Eves Drive in Marlton, N.J., and Hardenberg Insurance leased 11,000 square feet at 8000 Sagemore in Marlton. Cooper Health, Sun Bank, Northrop Grumman and Teknion were among those tenants that renewed leases.

Office rents show just a slight improvement, settling in a range between $10 and $14 a square foot and the overall market average at $11 a square foot, the report said.

There were some indications the market continues to struggle, though. The west side of Cherry Hill, N.J., and Pennsauken, N.J., has 28 percent of its 2.7 million square feet of space vacant. Lockheed Martin contributed to that this quarter when its lease on 81,000 square feet at 2339 Route 70 expired and the company didn’t renew.

Subaru also remains a wildcard and could have a big effect on the market depending on what it decides to do with its Cherry Hill headquarters. The company continues to search for a new 250,000 to 300,000-square-foot headquarters and is considering sits in South Jersey and Philadelphia.

Source: Philadelphia Business Journal