New Jersey employers eliminated 61,400 positions in the past 12months, or 1.6% of payrolls, says Michael Fasano, vice presidentand regional manager of the New Jersey office of Marcus &Millichap Real Estate Investment Services. Layoffs peaked duringthe preceding year, when 176,100 employees were let go. Blue-collarsectors have been hit hardest by economic turmoil, though the paceof layoffs has begun to slow. "In the most recent 12-month period,construction and manufacturing employers shed a total of 35,500jobs, or an aggregate staffing cut of 8.5%," he says, adding, "Inthe previous year, head counts in these sectors were slashed by55,400 positions. The health services sector has expanded by 12,300workers, or 2.1%, since the first quarter of 2009. Roughly 6,500jobs were created in the segment during the previous one-yearstretch."

Although government payrolls have gained about 5,000 positionsin the past year, changes to the state budget will cutdiscretionary, nonpermanent funding to cities, hospitals, schooldistricts and public universities. As a result, says Fasano, "asignificant but indeterminate number of jobs will likely be cutduring the second half of 2010."

Confronted by the challenging economic conditions, many businesssectors remain reluctant to make significant capital and laborinvestments, which has translated into a diminished appetite foradditional real estate requirements. After slipping to 22.6% atyear-end 2009, the Northern and Central New Jersey overall officeavailability rate eclipsed 23% during the first quarter, says Grubb& Ellis vice president and client services manager StephenJenco, who authored the report. Nearly 35.6 million square feet ofdirect and sublet space was available in the office market in early2010 compared to 32.1 million square feet being marketed one yearago.