Office Market Is a 'Mixed Bag'

"The market in New Jersey is a mixed bag, with some areas performing better than others," says Matt Dolly, director of research for GVA Williams NJ. "In particular, Morris and Somerset counties have experienced increased leasing activity, evidence that a trend is occurring in which tenants may be migrating west. The office market in the legal, healthcare and education sectors is experiencing steady tenant demand with strong activity throughout the state.

"A positive development in the marketplace is that we are starting to see an increase in demand from business continuity users," Dolly says. "That could be a strong driver for the second half of the year."

Other highlights of Q2 2007: The overall office vacancy rate at the end of Q2 was 18.1%, an increase from 17.95% last quarter and 17.9% this time last year. North Jersey's vacancy rate was 16.6%, a decrease from 16.9% last quarter and 16.9% Q2 2006. Central Jersey's vacancy rate was 20.42%, an increase from 19.6% last quarter and 19.51% Q2 2006.

Also, sublease opportunities currently represent 17.8% of available space, decreasing from 19.3% last quarter and increasing from 15.2% at the same time last year. Sublease space decreased in four of the 10 counties researched in the Q2 2007.

Finally, statewide average asking rents are $24.29 per sf gross plus tenant electric, an increase from $24.13 in Q2 2006 and virtually unchanged from $24.30 in Q1 2007. Rents decreased in the northern part of the state to $24.47 from $24.52 in the Q1 and $24.53 in the Q2 2006. Central Jersey rents increased to $24.03 from $23.98 in the Q1 and $23.47 in Q2 2006.