While sublease space once amounted to about 20% of all available space, it's now in the 40% range in the New Jersey market, according to Tom Giannone, SVP of Julien J.Studley, Inc. But has the increase in both sublease space and the overall vacancy rate turned this into a tenants' market?

"Not really," according to Giannone, whose firm mostly reps tenants. "It has given tenants more choices, but the situation is very unusual because things haven't changed much for landlords. For them, the vacancy rate is still 8-10%."

In other words, sublet space still provides a revenue stream even if it's vacant. And the amount of space no one's paying rent on hasn't changed all that much, mostly because development constraints have kept spec construction down.

And within the sublet statistics there is a definite cleavage. "In the mature markets like Bergen County, the Meadowlands, Paterson and Wayne, sublet space is 28% to 33% of the total vacancy," Giannone continued at the RBP meeting. "In the faster growing markets, like Morris and Middlesex counties, Princeton and the Hudson waterfront, sublet space amounts to about 50% of the total."

But even though tenants might have more options, "a lot of the sublease space isn't appropriate for some tenants," cautioned Mark Yeager, president of The Gale Co., Florham Park, NJ. "You need to understand the nature of demand and your competition."

Beyond that, Gale, as a developer/owner, is "more cautious on the development and investment side now," according to Yeager. "It's important to be patient, to evaluate the market more closely."

Still, the news isn't all bad. "We're sometimes too focused on statistics," pointed out Joseph Taylor, president of Matrix Development Group, Cranbury, NJ. "Even under the current conditions, New Jersey is a pretty good place to be," he continued, reflecting on market conditions elsewhere in the country."

As far as the recession in general, "this one is unique," according to Jon Mikula of Holliday Fenoglio Fowler, Edison, NJ. "In the recession of the early '90s, we had a capital crunch. Not now – lenders across the board have all increased their allocation."

"Ownership is more disciplined and more capital-sensitive," added Yeager. "That controls spending."

And while the current slump isn't nearly as bad as the last one, neither will the recovery be as exciting. "After the last recession we were buying stuff at 25 to 30 cents on the dollar. This time we won't have the same 'pop' coming out the other side."

Addressing development constraints besides the economy, Yeager mentioned the legislative environment. "Outside of the cities, there is not a single suburban town that welcomes development," he asserted, noting it as a key reason for The Gale Co.'s increased interest in cities like Newark.

Another issue is infrastructure, according to Taylor, whose company has also made a push into Newark, New Brunswick and Perth Amboy. "We have to keep it funded and moving forward," he said, pointing specifically at the state's bridges, the EZ-Pass toll collection that's currently mired in a sea of red ink, and port dredging issues.

Finally, Eric Shake, managing director at Marsh-McClennan, pointed to insurance, "especially against terrorism. It is extremely difficult to purchase it, and it is tough to get lenders to lend without it.

Referring to one lender that's currently securitizing a $1 billion portfolio, "the buyer is kicking out every asset without terrorist insurance," Mikula concluded.