EDISON, NJ-The faint light that appeared at the end of the tunnel for the Northern and Central New Jersey office market during the fourth quarter of 2009 grew dimmer three months later, as limited demand lost ground to additional space generated by corporate restructurings. The 421,900 square feet of positive net absorption witnessed in late 2009 yielded to 819,200 square feet of negative absorption in the first quarter of 2010, according to locally based Grubb & Ellis’ first quarter office report. This represented the largest volume of negative absorption since the second quarter of 2009. Employment growth, a key pillar to sustain future expansion within the office market, remained elusive.

New Jersey employers eliminated 61,400 positions in the past 12 months, or 1.6% of payrolls, says Michael Fasano, vice president and regional manager of the New Jersey office of Marcus & Millichap Real Estate Investment Services. Layoffs peaked during the preceding year, when 176,100 employees were let go. Blue-collar sectors have been hit hardest by economic turmoil, though the pace of layoffs has begun to slow. “In the most recent 12-month period, construction and manufacturing employers shed a total of 35,500 jobs, or an aggregate staffing cut of 8.5%,” he says, adding, “In the previous year, head counts in these sectors were slashed by 55,400 positions. The health services sector has expanded by 12,300 workers, or 2.1%, since the first quarter of 2009. Roughly 6,500 jobs were created in the segment during the previous one-year stretch.”

Although government payrolls have gained about 5,000 positions in the past year, changes to the state budget will cut discretionary, nonpermanent funding to cities, hospitals, school districts and public universities. As a result, says Fasano, “a significant but indeterminate number of jobs will likely be cut during the second half of 2010.”

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