Combined, the office market in northern and central New Jersey registered a 21% vacancy rate, the highest level in more than four years. Currently, more than 32.1 million square feet is available on a direct and sublease basis.

Looking at each region separately, northern New Jersey fared a bit better. The class A vacancy rate there dipped slightly from 19.7% at year-end 2008 to 19.5% in Q1. Downtown Newark and the Hudson Waterfront submarkets both sported class A office vacant inventories in the single digits. For all classes, absorption was positive at 462,434 square feet. The class A office sector in the central portion of the state, meanwhile, hit its highest level since mid-2007 at 24%. Market-wide, absorption was negative at 366,779 square feet.

With companies hesitant about making moves in a down economy, Grubb predicts market activity will be dominated by space consolidations and lease renewals rather than significant expansions. Firms prefer to re-up at aggressive renewal terms instead of paying for a costly relocation.