PARSIPPANY, NJ-The New Jersey office market vacancy rate dropped0.8% to 25.6% during the third quarter according to new research byJones Lang LaSalle. Although the drop is slight, it represents themost significant decline in overall vacancy since the first quarterof 2005.

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The state’s third quarter vacancy rate is the lowest in fiveconsecutive quarters and indicates that there is less than 40million square feet of office space available. This may point tothe market hitting bottom and stabilizing in the future. “Thisvacancy rate drop is due to a combination of factors: a decline innew product being placed on the market, robust leasing activity andseveral transactions by large users purchasing buildings for theirown use,” stated Dan Loughlin, managing director at JLL.“Year-to-date leasing activity is well ahead of last year’s pace,another key positive indicator,” he tells GlobeSt.com. “However,vacancy levels are not anticipated to decrease significantly untilNew Jersey experiences consistent job growth.”

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While New Jersey’s statewide vacancy rate was 25.6% during thethird quarter, in the northern part of the state it fell to 22.4%from 22.8%, while the rate in Central New Jersey remained unchangedat 31.8%. When a handful of the market’s largest blocks of space,which cannot accommodate most tenants' requirements today areeliminated from the vacancy rate, New Jersey office vacancydeclines several percentage points to 23.1%.

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Statewide average asking rents stood at $23.85 per square foot,a decline of $0.08 from the previous quarter. The decline islargely attributed to a 17 cent drop in average rents in CentralNew Jersey, which stood at $22.98. Rents in Northern New Jerseydropped a penny to finish at $24.80.

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There have been 15 lease transactions completed this year so farin excess of 100,000 square feet, five more than were signed in thewhole of 2009. There were three such deals in the third quarter,including a 270,972-square-foot renewal and expansion in JerseyCity. Other major deals this quarter included a 161,683-square-footrenewal and expansion in Secaucus and a 123,080-square-foot newlease in Berkeley Heights.

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Strong sales activity also helped to lower the vacancy rate inNew Jersey. Major sales included the purchase of a162,405-square-foot building in Somerset, a 152,261-square-footbuilding in Parsippany, and a 72,000-square-foot building inBridgewater, all three of which are class A buildings.

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