Breaking News

Report: Slow recovery continues to impact NJ office market

New Jersey’s office and industrial markets showed an uptick in activity in 2012’s fourth quarter, and while it wasn’t enough to completely offset a lackluster year in leasing and investment activity, particularly in the office sector, it did provide a potential prelude to a better 2013.

However, both the 2012 performance and the prospects for 2013 continued to be tempered by an economy slow to rebound.

“New Jersey’s economic recovery remained lackluster in 2012,” confirmed Gualberto “Gil” Medina, executive managing director of Cushman & Wakefield, Inc. in New Jersey.

“For example, while the unemployment rate edged downward in the fourth quarter, it was still at 9.6 percent, well above the national average of 7.7 percent.”

Modest job growth has yet to generate substantial space requirements for corporate New Jersey. The job growth that has occurred has been in the professional and business services, trade, transportation and utilities sectors in Northern New Jersey, and in the educational, health, professional and business services sectors in Central New Jersey, according to the commercial real estate services firm.

Demand for office space in Northern New Jersey did increase in the fourth quarter of 2012, topping third quarter activity by 44.2 percent, driven by the financial, insurance and life sciences industries, according to Cushman & Wakefield. Bergen and Morris counties experienced the strongest performances.

For the full year, however, demand trailed 2011 by 32.4 percent. “The total of 3.7 million square feet leased year-to-date was a 10-year low,” said Medina. “Large firms have been less inclined to spend capital on real estate costs and, as a result, have opted to stay in place. Renewals, totaling 2.9 million square feet, accounted for almost 44 percent of all leasing activity. Some of the larger renewals have included PSE&G in Newark, UBS in Weehawken and Morgan Stanley in Jersey City.”

Northern New Jersey ended 2012 with a vacancy rate of 18.3 percent, a recent high, reflecting the low leasing activity and a number of corporate dispositions, including AIG’s shedding of 150,000 square feet at 90 Hudson Street in Jersey City. As a result, average rents continued to trend downward, dropping slightly from the third quarter to the fourth to a recent low of $25.59 per square foot.

Largest leases for the year included Biomet’s 102,224-square-foot transaction at 399 Jefferson Road in Parsippany; The Bank of Tokyo-Mitsubishi’s 100,274-square-foot expansion at Harborside Financial Center III in Jersey City; Prudential Real Estate Investors, 95,238 square feet at 7 Giralda Farms in Madison; and Citigroup’s 92,554-square-foot sublease at 480 Washington Blvd., Jersey City.

The final months of 2012 did see the strongest investment activity in four quarters in Northern New Jersey. But while the number of investor sales rose as 2012 progressed, the total volume lagged 2011 by 2.1 million square feet. Largest sale transactions were Cole Real Estate Investments’ $53 million acquisition of 8 Sylvan Way, Parsippany, and Bayer Corp.’s $45 million acquisition of 67 Whippany Road in Whippany.

The past year saw manufacturing continue to struggle, but its impact on the overall market was offset by gains in warehousing/distribution, fueled by rising retail sales. The result for Northern and Central New Jersey was modest leasing activity of 17.7 million square feet, according to Cushman & Wakefield. That number was down 24.4 percent from 2011 but exceeded the five-year rolling average.

In Northern New Jersey, activity totaled seven million square feet, topped off by a fourth quarter that posted the highest quarterly total since Q1. Fueling fourth quarter demand were 740,000 square feet of leases by Imperial Bag & Co. and Peapod at the under-construction Pulaski Distribution Center in Jersey City.

“The New Jersey industrial market is expected to continue to outperform the office market,” said Medina. “Occupancy levels are expected to further advance, especially in such submarkets as Exit 8A and 7A. In the port region, the raising of the Bayonne Bridge and dredging of the harbor to accommodate the next generation of larger cargo vessels indicates that activity will remain strong in the coming years.”

One Response

Leave a Reply
  1. House for sale in Beverly Hill
    Feb 21, 2013 - 10:15 AM

    I admire the
    valuable information you offer in your articles.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyrıght 2013 FUEL THEMES. All RIGHTS RESERVED.