Smaller Tenants Drive Office Market

"Our research indicates that New Jersey office market generally healthy leasing activity during the normally slow summer months," says Ray Sohmer, senior managing director of CBRE in New Jersey. "Also, the completion of such new office developments as Carnegie Center [in Princeton] and Country Club Plaza II [in Paramus] will only add to the state's attraction as a corporate headquarters location."

Notable trends in Q3, according to Sohmer, were "a large amount of lease renewals as well as completion of multiple significant deals that had previously been on hold." Among them: ABB Lummus' 155,000-sf lease at 1515 Broad St. in Bloomfield; Motorola's 145,000-sf lease at 1111 Durham Ave. in South Plainfield; IMS Health's 120,000-sf lease at 11 Waterview Blvd. in Parsippany; and Deutsche Bank's 82,000 sf at 2 Harborside in Jersey City.

And the waterfront submarket, anchored by Jersey City, continues to perform well, according to Sohmer. Through three quarters, the market's 1.1 million sf of total absorbed space had already surpassed 2006's total.

By the numbers, Northern and Central New Jersey's availability rate has continued to decline, albeit slowly. The figure came in at 17.5% in Q3 2007, according to CBRE's figures, down 0.1% from the end of Q2, and down 0.4% from Q3 2006. Available space at the end of Q3 2007 was 27.7 million sf, down slightly from Q2's 27.8 million sf, and down from Q3 2006's 28.2 million sf.

Even so, average asking rents dropped slightly during Q3 2007, down $0.04 to $25.77 per sf at the end of Q2. Still, that was $0.38 higher than at the end of Q3 2006. The quarter-to-quarter drop in 2007 is said to be a reflection of the impact of lower sublease rates.