should hopefully make
things more clear in NJ
PARSIPPANY,NJ-It’s that time of year again: third-quarter market reports are starting to roll out. The state of New Jersey office, fortunately, has not done anything dramatic over this past quarter – at least according to data from Colliers International. The most significant change is that overall availability of space is up, from 20.3% in Q2 to 21.0%, but Matt Dolly, senior managing director of research and analytics with the firm, doesn’t see that the change will cause concern.
He explains that a few larger tenants recently made the decision to consolidate or moved into new spaces, pushing the overall availability rate up. For instance, he cites Pearson’s relocation to Hoboken – freeing up approximately 475,000 square feet of space – as one of the reasons why availability increased.
“Some large blocks came on the market,” in the last quarter, Dolly explains, adding that the “tendency is consolidating or improving space or trading up for space, but not expanding as much.”
“There have been some deals done,” he continues, “but not enough to fill the gaps,” like the aforementioned vacancy left by Pearson. He feels the trends are moving towards redevelopments of space as a lot of these empty spaces are seen as obsolete as former tenants want to move out – and up.
Across the state over the past quarter, the average asking rent decreased from $22.03 in Q2 to $22.00 in Q3, while in the Northern portion of the state, it showed an increase from $22.10 in Q2 to $22.22 in Q3. Dolly says that rents have remained “pretty stagnant” over the past few years, adding, “negotiations will be happening at the table, but as far as lifting rents, you won’t see this as much.”
Much of the market’s stoicism is also – as with just about everything else – attributed to the election. People are just waiting and seeing across the board, and this makes for little movement. Concerning the end of 2012 and beginning of 2013, Dolly feels that no one is really going to do anything until they see which candidate will end up in the White House and for New Jersey in particular, the gubernatorial election next year will delay any kind of big moves just that little bit more.
Currently, he says, “The state is doing a good job of retaining tenants with incentives, which may not be the best way to retain tenants but we might lose these tenants to other states if we lose the incentives. Obviously, we’re looking to attract new customers to the state too but we want to keep what we have here – we lost Roche.” He speculates, “incentives are only going to go so far, but areas that have mass transport are containing to grow – Hoboken, Red Bank, Morristown, for example – but ultimately the election is delaying decisions.”