MORRISTOWN, NJ-Avison Young's managing director in New Jersey tells GlobeSt.com his company sees a market poised for a lot of tenant activity this year.

Jeffrey L. Heller says the biggest trend in 2013 involved companies reassessing their space needs in light of a rebounding economy. “As the state's unemployment reaches four-year lows and the life science and technology sectors continue to blossom,” he says, a modest recovery fr the commercial real estate market is in the cards.

Avison Young's 4^th quarter analysis documents the strong move by companies toward more effective use of space and a new openness to the idea of relocation to achieve that.

“Landlords are increasingly willing to allow space reductions,” Heller says. More smaller units are being made available, creating opportunities for younger companies – especially in the technology sector, he notes.

A-Y notes in its 4^th quarter report that several mergers and corporate consolidations resulted in large blocks of space being returned to the market:

Siemens announced it will slice its worldwide workforce – and quickly redesigned its Iselin offices in Metro Park to cut more than one-third of its space, making it available for sublease.
In the same Metro Park area, 81,276 square feet previously occupied by Maidenform became available after Hanesbrands acquired the intimate apparel maker.

Of the office leases signed in the quarter, almost half of those over 50,000 square feet were renewals or relocations in which tenants took the same amount or less space, A-Y says.

The overall office vacancy rate in Q4 rose slightly, to 21%, from 20.8% in the previous quarter.

Asking rents increased for three consecutive quarters for the first time since 2007, reaching $22.79 per square foot in Q4, a $0.25 increase year-over-year.

On the other hand, says A-Y's statistical guru in New Jersey, Matthew Dolly, “The new Economic Opportunity Act is creating opportunities within the state and is going to drastically reduce costs for new and relocating companies.”

“We're expecting to see immense activity on that front,” Dolly said. “With recent surveys showing that nearly 60% of business owners plan to hire in 2014, the job market is aligning nicely with the state's objectives.”

According to A-Y's analysis 155,600 private sector jobs have been added in the last four years, and the unemployment rate is currently 7.8%. Other highlights of the report, concerning the office market in northern NJ:

* The vacancy rate remained static, at 22.3% at the end of 2013, with large blocks thrown onto the market and also absorbed.

About 600,000 square feet was added, including 300,000 at Goldman Sachs' waterfront building in Jersey City, after the financial giant decided not to expand into the space.
GAF said it will take 377,000 square feet at the former Realogy headquarters in Parsippany.
Wayne Township lost two major corporate tenants - Bayer Healthcare and Ashland Specialty Ingredients – but Haier America relocated to Wayne from Manhattan.

The two biggest leases in the state were signed in Central Jersey:

Valeant Pharmaceuticals moved its American headquarters to 310,000 square feet at Somerset Corporate Center in Bridgewater after getting a $38 million Grow NJ incentive grant.

Avaya sold its 283,000-square-foot headquarters and leased back half the space.

Still, the vacancy rate ticked up a half point from the previous quarter to 19.1%.

Instant Insights /

A-Y: Tenants Activity Will Be Up in 2014

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