RESEARCH 1Q 2020

SOUTHERN NEW JERSEY

OFFICE MARKET
A STRONG START TO 2020, YET CURRENT CONDITIONS
MOMENTUM IS EXPECTED TO Overall net absorption for the first quarter totaled a positive 51,859 square
STALL feet prior to the global coronavirus pandemic beginning in mid-March

Prior to the onset of the global coronavirus pandemic in mid-March, the

Market rents bumped up from $20.78/SF to $20.85/SF in first quarter of
Southern New Jersey office market kicked off the new year with positive
2020
net absorption of 51,859 SF. The first quarter’s occupancy gains were
driven by the Cherry Hill and Mount Laurel submarkets, which posted Liberty Walk at East Gate sold to Nessel Development Corp., a Dallas, Texas-
positive absorption of 51,859 SF and 44,663 SF, respectively. As a result, based private investment firm focused on sustainable investments
overall vacancy dropped to 15.9% from last quarter’s 16.1%. On the
other hand, the Marlton, Moorestown, Pennsauken/Camden and MARKET ANALYSIS
Voorhees/Gibbsboro submarkets experienced slight occupancy losses.
The first quarter of 2020 ushered in a wave of renewals, particularly in Asking Rent and Vacancy
Mount Laurel, where deals of this type measuring nearly 200,000 SF in
$23 21%
total were transacted by tenants that chose to hold onto their large
blocks of space. In the immediate future, renewals and blend/extend $22 18%

deals may become increasingly common in the market as businesses $21 15%
weigh the benefits and costs associated with moving against the $20 12%
financial toll imposed upon them by the pandemic.
$19 9%

$18 6%
The market’s largest first-quarter occupancies occurred in the Cherry
1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20
Hill submarket, where Camden County occupied 55,406 SF and
Direct Asking Rent (Price/SF) Vacancy (%)
Jefferson Health occupied 37,037 SF of the space formerly occupied by
American Water at 101 Woodcrest Drive. In contrast to the
Net Absorption (SF, Millions)
aforementioned occupancies, The Philadelphia Inquirer vacated 12,873
SF at 53 Haddonfield Road in Cherry Hill and downsized into coworking
space at 309 Fellowship Road in Mount Laurel. Notable tenant 300

movement occurred in the Marlton submarket including SHEEX’s leasing 150

12,046 SF at 9 East Stow Road, while Xtel Communications vacated 0
10,207 SF at 10 Lake Center Drive and downsized into 7,870 SF of space
-150
at 10000 Midlantic Drive in Mount Laurel. Samaritan Healthcare
relocated from 21,000 SF at 5 Eves Drive in Marlton and expanded into -300

the entirety of the 27,600-square-foot building at 3906 Church Road in -450

Mount Laurel. The Moorestown submarket was relatively quiet this 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20

quarter aside from Cisco Systems vacating 11,488 SF at 308 Harper

Drive. Moving forward, occupancy timelines for tenants will be disrupted MARKET SUMMARY
by measures instituted by governmental agencies upon the trades to Current Prior Year Ago 12 Month
slow the spread of COVID-19. Quarter Quarter Period Forecast
Total Inventory 16.8 MSF 16.8 MSF 16.2 MSF 
Overall rents continued to push upward this quarter from $20.78/SF to
Vacancy Rate 15.9% 16.1% 16.0% 
$20.85/SF, the highest rents achieved since the second quarter of 2018.
Quarterly Net Absorption 51,859 28,274 -23,202 
While demand in the Southern New Jersey office market was
demonstrably healthy before the effects of the global pandemic began Average Asking Rent $20.85 $20.78 $20.82 
to be felt, rents in the first quarter of 2020 have likely peaked and are Under Construction 0.0 MSF 0.0 MSF 0.3 MSF 
expected to gradually decrease in the quarters to come.
Deliveries 0.0 MSF 0.0 MSF 0.0 MSF 

© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 1

1Q 2020 SOUTHERN NEW JERSEY OFFICE MARKET

SUBMARKET STATISTICS
Total Under Total Qtr YTD Class A Class B Total
Inventory Construction Vacancy Absorption Absorption Asking Rent Asking Rent Asking Rent
(SF) (SF) Rate (SF) (SF) (Price/SF) (Price/SF) (Price/SF)

Cherry Hill 3,610,936 - 14.2% 55,857 55,857 $23.05 $22.49 $21.54

Marlton 2,481,145 - 20.4 % -11,433 -11,433 $26.23 $17.20 $20.92

Moorestown 1,047,939 - 14.7 % -14,257 -14,257 $27.75 $21.50 $23.54

Mount Laurel 5,880,459 - 15.4 % 44,663 44,664 $22.67 $18.38 $19.99

Pennsauken/Camden 2,442,317 - 9.0 % -7,975 -7,975 - $15.19 $18.03

Voorhees/Gibbsboro 1,336,748 - 27.2 % -14,996 -14,996 $26.25 $20.01 $20.63

Market Totals 16,799,514 - 15.9 % 51,859 51,859 $24.35 $19.75 $20.85

SELECT LEASE TRANSACTIONS

Tenant Building Submarket Type Square Feet
CSAA 1400 Howard Blvd Mount Laurel Renewal 75,000
Canon Financial Services 158 Gaither Dr Mount Laurel Renewal 50,030

Parker McCay 9000 Midlantic Dr Mount Laurel Renewal 50,000

Conrail 330 Fellowship Rd Mount Laurel New/Relocation 26,328

SELECT SALES TRANSACTIONS

Building Submarket Sale Price ($) Price/Square Foot Square Feet

Cherry Hill Executive Campus 5 & 6 Cherry Hill $11.6M $69.47 166,979
Liberty Walk at East Gate Mount Laurel $33.6M $325.98 103,075
Laurel Oak Corporate Center Voorhees $4.0M $55.00 73,088
350 Fellowship Rd Mount Laurel $8.0M $143.24 56,268

© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 2

1Q 2020 SOUTHERN NEW JERSEY OFFICE MARKET

ECONOMIC CONDITIONS EMPLOYMENT BY INDUSTRY

In January 2020, before the pandemic-induced economic disruption hit,
unemployment in the Camden Metro Division was 4.4%. At that juncture, Camden, NJ Metropolitan Division, 2019 Annual Average
overall employment in the region had demonstrated modest growth led
by the business & professional services sector, which grew 4.7% from
January 2019, an annual level not achieved since the second quarter of 4.3%
2017. Also in January, the construction and leisure/hospitality sectors 14.0% Business & Professional
3.5% 7.3%
experienced the most notable employment contractions year-over-year
Financial Activities
— now, greater losses are anticipated in the quarters to come.
Manufacturing
9.2%
As of early March 2020, tenant demand for space was healthy in the 23.1% Information
Southern New Jersey office market, up nearly 35% from the first quarter Construction
of 2019. The breakdown of space requirements in the market by
Education/Health
industry revealed that the largest sector drivers of current demand were 18.3%
5.4% 1.2% Leisure/Hospitality
legal, healthcare, other business services, finance and education. 13.8%
Demand by tenants in the healthcare sector may remain steady due to Trade/Transportation/Utilities
the industry’s vital necessity in this health crisis. Whether demand from Other Services
traditionally office-occupying industries, such as the finance sector,
Government
remains at first-quarter 2020 volumes will likely depend upon on the
Source: U.S. Bureau of Labor Statistics
duration of economic disruption and associated financial setbacks.

UNEMPLOYMENT RATE PAYROLL EMPLOYMENT

Not Seasonally Adjusted Total Nonfarm, Not Seasonally Adjusted, 12-Month % Change

12%
6%
10%
4%
8%
2%
6%
0%
4%

2% -2%
Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
-4%
Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
United States Camden, NJ, Metropolitan Division
U.S. Camden, NJ, Metro Division
Source: U.S. Bureau of Labor Statistics
Source: U.S. Bureau of Labor Statistics

TENANT DEMAND BY INDUSTRY EMPLOYMENT GROWTH BY INDUSTRY

Largest Share of Space Requirements by Industry in March 2020 Camden, NJ Metropolitan Division, January 2020, 12-Month % Change

Total Nonfarm
180,000
28% Construction
Total Square Feet of Requirements

160,000 Manufacturing
140,000 Trade/Transportation/Utilities
120,000 Information
100,000 Financial Activities
80,000
13%
10% Business & Professional
60,000 Education/Health
6% 5%
40,000 Leisure/Hospitality
20,000 Other Services
0 Government
Legal Healthcare Other Finance Education
Business -13.0% -8.0% -3.0% 2.0% 7.0% 12.0%
Services
Source: U.S. Bureau of Labor Statistics
Source: NKF Research

© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 3

1Q 2020 SOUTHERN NEW JERSEY OFFICE MARKET

LISA DENIGHT ANGELO BRUTICO

Research Manager Research Analyst
215.246.2725 610.755.6969
lisa.denight@ngkf.com angelo.brutico@ngkf.com

Newmark Knight Frank has implemented a proprietary database and our tracking methodology has been revised. With this expansion and refinement in our data, there may be adjustments in
historical statistics including availability, asking rents, absorption and effective rents. Newmark Knight Frank Research Reports are available at www.ngkf.com/research

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© NEWMARK KNIGHT FRANK | 2019 RESEARCH | 4