NEWARK-Its unemployment rate still well above the national level at 9.3%, the Garden State nonetheless has regained a little more than half the private-sector jobs it lost during the recession, said Michael Van Wagner, executive director of the New Jersey Business Action Center and moderator of the opening panel at Wednesday’s RealShare New Jersey Opportunities Breakfast here. While panelists agreed that the administration of Gov. Chris Christie—including the initiative that Van Wagner heads—has far exceeded its predecessors in bolstering private-sector hiring, Marcus & Millichap‘s regional research director, Paul Arena, noted that far stronger job growth will be necessary in order to create across-the-board demand for commercial real estate.
That’s especially true in the office sector, where Bob Martie, EVP with Colliers International, said the space-use picture could be summed up in two words: BankofAmerica and MetLife. Both employers have announced major downsizing of their New Jersey operations, a move that follows the recent scaling back of what was formerly Big Pharma in the Garden State.
That being said, Jeff Hipschman, senior managing director at CBRE, revealed a surprising statistic after polling the audience. While the perception is that the New Jersey office sector is “a market of musical chairs” and few companies are growing, Hipschman said that in fact 51% of the state’s office tenants increased their space last year. “A good chunk of our companies are expanding in some form or fashion,” he said.
To that point, Van Wagner noted that between the end of March and early May, he’ll be going to nine ceremonies for office developments that are either breaking ground or cutting the ribbon. Hipschman noted that aside from “challenge sectors” such as the once-invincible pharmaceutical industry, New Jersey has done a good job of encouraging office-using employers to relocate or expand.
And while noting his own “shock jock” pronouncement about the office sector, Martie offered, “We get hyper-focused on doom and gloom.” For every Pfizer or Merck that’s shedding vast amounts of space, Martie said, there are 10 companies that are moving to New Jersey, staying here or growing their workforce, even if many of those firms are lesser-known names.
Andrew Marshall, SVP, development with Roseland, now a Mack-Cali company, said the firm has been looking at suburban offices that are underutilized or outdated. Some of that space will be repurposed as multifamily, thus increasing the office properties’ potential appeal by making them more convenient to those who’d work there.
On a related note, Marshall cited the “flight to the urban core,” with companies relocating their offices to be closer to the employee base. “The younger workers—that’s where they want to be,” agreed Hipschman. “They don’t want to be in suburbia; they want to be in urban centers.”
The growth in multifamily across the state—the “Investment Sales Forecast” panel that followed noted that 2012 was the best year for apartment construction since 2008—has also spurred industrial demand, thanks to the e-commerce boom. “New Jersey fortunately is a hotbed, up and down the Turnpike, for that type of demand,” Hipschman said. Approximately 200 industry professionals attended the breakfast, held at the Newark Club.