"Northern New Jersey leasing activity registered more than 1.6million sf this quarter," says Gil Medina, executive managingdirector at Cushman & Wakefield, East Rutherford. "Thisindicates that despite the declining economy and slower pace ofactivity, some companies appear to be less apprehensive than othersin terms of making space commitments."

|

Overall, though, vacancies are up a bit. C&W's numbers showa North Jersey vacancy rate of 16%, up 0.3% from the end of 2007,and Central Jersey vacancies up 2.2 points to 20.3%, although muchof that is attributable to Lucent's departure from 101 CrawfordsRd. in Holmdel. Figures from GVA Williams NJ, Parsippany,meanwhile, show a combined North/Central office vacancy at the endof Q1 at 17.8%, up from 17.6% last quarter but down from more than17.9% a year ago.

|

"Uncertainty for New Jersey's future business climate has causedan increase in tenants remaining in their current spaces andseeking shorter-term leases," says Matt Dolly, GVA Williams NJ'sdirector of research. "As a result, office leasing velocity hasconsiderably slowed during Q1. With tenants staying put, occupancyin landlords' portfolios has increased, and with a lack of newconstruction, rents have actually started to rise."

|

Dolly's statistics have statewide North/Central average askingrents at $24.52 per sf, up from $24.30 in Q1 2007 and $24.49 in Q42007. C&W's research puts North Jersey average asking rents at$27.17 and Central Jersey's at $25.11, with both regions showing"slight fluctuation."

|

But the occupancy cost picture, if not actual rents, could bechanging. A new report from Studley indicates that landlordconcession packages are 16.7% higher than a year ago, coming in atan average of $35 per sf at the end of 2007 compared to $30 per sfat the end of 2006. And tenant uncertainty will likely remainelevated as the economy falters.

|

"In a softening market, landlords typically prefer to increaseconcessions rather than to lower face rents," says George Martin,vice chairman in Studley's Iselin office. "These concessions candrive effective rents down, creating more attractive opportunitiesfor tenants."

|

Studley senior managing director Philip Lipper says that "thestate still hasn't seen significant net positive absorption, as themajority of lease transactions are a result of renewals andbusinesses playing musical chairs. We can expect to see littleincreased activity in the coming year, but there will be additionalopportunities for tenants to lower their expenses."

|

Dolly specifically points to Jersey City's waterfront market,along with Princeton and Parsippany as the strongest submarket. Thelargest office lease so far this year, in fact, was AXA Financial's245,000-sf deal at Brookfield Properties' Newport Towerhere in February. AXA Equitable then turned around and quickly took100,000 sf at Hartz Mountain's 500 Plaza Dr. inSecaucus earlier this month. And in Central Jersey, Danishpharmaceutical giant Novo Nordisk, inrecent days, leased the entire 167,000-sf building at 1100 CampusDr., a Patrinely-owned building in Plainsboro.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.