Desire for Class A space offset by rise in Class B vacancy, JLL finds

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The flight to high-end space dominated leasing activity in New Jersey’s office market in 2015, according to new research from the commercial real estate services firm JLL.In a year-end market report, JLL found office tenants in northern and central New Jersey “overwhelmingly preferred” to locate their businesses in Class A space. That resulted in nearly 1.4 million square feet of positive absorption for Class A space last year, according to JLL, pushing vacancy in that category down a full percentage point, to 24.1 percent, from 2014.

Conversely, the state’s Class B market saw nearly 1.1 million square feet of negative net absorption in 2015, JLL found. Vacancy among those buildings climbed one percentage point, to 25.6 percent, the highest level in three years.

All told, leasing activity on both ends of the spectrum counteracted each other in the fourth quarter of 2015, JLL found. Researchers tracked 80,546 square feet of negative absorption in Q4, with 152,893 square feet of positive absorption in the Class A market compared with 233,440 square feet of negative net absorption for Class B product.

That left vacancy unchanged from Q3 to Q4, at 24.6 percent, according to JLL.

“The state’s overall vacancy rate was kept in check during the fourth quarter as the Class A and Class B office markets navigated divergent courses,” Robert Kossar, executive managing director and market director for JLL’s New Jersey operations, said in a prepared statement.

The firm said the information and technology sector highlighted the final three months of 2015, accounting for 30 percent of the total leasing volume in the region, JLL said. The largest transaction was Vonage inking a 350,000-square-foot renewal at 23 Main St. in Holmdel.

Professional and business services companies were responsible for about 16.3 percent of the leases completed during Q4, while banking and financial services firms accounted for 13.4 percent of the deals.