MORRISTOWN, NJ–In its 2nd quarter look at thestatewide office market, Avison Young sees theimpact of state economic incentive programs at long last ripplingout to stimulate the suburban markets.

|

AY reports the office vacancy rate increased slightly from thefirst quarter, to 21.3%, as corporate consolidations andvacated space narrowly outpaced leasing activity. Despite that, AYnotes strong continuing demand for high-quality office spaceremained strong, nudging the average asking rent to $23.59 persquare foot a $1.01 increase year-over-year.

|

The beefed-up incentives of the landmark New JerseyEconomic Opportunity Act of 2013 have spurredcompanies to target large blocks of space that exist primarily inthe suburbs, says AY in its new analysis.

|

“In a strengthening state economy and stabilizing office market,companies in New Jersey continue to take advantage of theunprecedented incentives offered under the latest legislation,”says Jeffrey Heller, principal and managingdirector for AY in the state. “Whereas activity in previousquarters was largely focused on the state's urban centers,increased leasing in the suburbs during the second quarter clearlydemonstrates the far-reaching effectiveness of theseincentives.”

|

The state has seen high rates of population decline and fleeingbusinesses in past years, Heller notes, but he says the incentivesprograms have been effective in retaining and attracting new jobs.More than $4 billion in tax credits has been approved bythe NJ Economic Development Authority since 2010.

|

While the greatest EOA incentive bonuses – for “mega-projects” -are available to urban centers and transit hubs, companies haverecently begun targeting closer-in suburban areas, Heller says.

|

“Businesses continued to reassess their space needs to fitwithin an evolving workforce and technological landscape,” saidMatthew Dolly, AY's chief of research. “The EOAhas been effective in counteracting consolidations and increasedvacancies.”

|

Dolly adds in the report that recent studies have indicated thatbusiness owners are optimistic about near-term company growth andhiring.

|

State unemployment dipped to 6.8% for the quarter, a six-yearlow, Dolly notes. At the same time, AY cautions that that theregional economy is not expected to reach peak employment until2018.

|

Click above to follow this story for more on the impact ofthe EOA.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.