"The new opportunities in sublet space have created a healthy dose of conservatism among owners, who are now more willing to make a deal in light of the current environment," David Simson, president of GVA Williams-NJ, tells GlobeSt.com. That current environment, according to Simson, consists of "a reduced number of tenants looking for space, corporate expansions that have been placed on hold and more available options for tenants looking for space."

He also feels that the current environment entails "a period of neutral absorption of office space," in terms of both direct and sublease availability. "As compared to first quarter of this year, the velocity of sublet space returning to the market has actually diminished. But in order to maintain corporate profits and satisfy shareholders, several Fortune 500 firms have announced mergers or are downsizing, which might lead to additional large blocks of available space as they reduce or consolidate real estate holdings."

That would seem to preclude spec development in a market that hasn't seen much to begin with. "A limited amount of speculative construction was started during the second quarter," Simson admits.

There were some exceptions. For example, the Langan Corp. is developing a new building in Elmwood Park, Simson points out, and GVA Williams-NJ itself is representing a new 130,000-sf building in West Orange. The steel is up on the latter. Also, Gale & Wentworth and JP Morgan have completed a new building in Parsippany, and the Rockefeller Group has done likewise in Florham Park. Outside of Morris County, Hines continues to move aggressively on its Bridgewater Crossing project in Bridgewater, and Reckson is proceeding with a 318,000-sf building in Princeton.

"We don't foresee additional speculative development through the second half of the year," Simson concludes. "That's particularly true of any building of over 100,000 sf, until and unless owners and lenders feel stability has returned, absorption reverses into a positive mode, rental rates stabilize or increase and downsizing by corporations ceases."