Avison Young: Tech' Helps Office Market

MORRISTOWN, NJ- The state's office market is benefiting from technology job growth, according to Avison Young's third quarter report = but overall,  growth is pretty much nil.

AY cites year-to-date U.S. labor statistics showing 5.2% more New Jersey companies are searching for employees in computer systems design and related services.

“Tech hiring is on the rise in the United States, and New Jersey – which has added 3,600 tech jobs through August this year – is at the forefront of this trend,” says Jeffrey L. Heller, AY's New Jersey principal. “As tech and media firms remain active in New York City, we're anticipating business overflow across the river to urban centers such as Jersey City, Newark and Morristown, where tech workers of the millennial generation want to live and work.” 

AT&T and T-Mobile renewed their leases in Piscataway and Parsippany, AY notes in its report. Fiserv signed two new leases during the quarter and Cablevision and Dish Network also signed new leases during the past three months in Newark and Roseland. British Telecom renewed its lease at Metro Park.

On the other hand, the AY analysis says most private-sector job growth is  occurring in sectors that don't  fill office space, such as education, health services, leisure and hospitality.

“It remains an opportune time for tenants to review their current leases and scour the market for alternative and improved options,” says AY's research chief, Matthew Dolly.

Other points from AY's Q3 analysis of the office market:

• Overall availability rate decreased very slightly to 20.8% from 21% the previous quarter and from 21.3% year-over-year.
• Net absorption was positive for two consecutive quarters for the first time since the third quarter of 2011.
• Asking rents averaged $22.75 per square foot - the highest level since the third quarter of 2012.

In northern NJ, the office market perked up a bit in Q3, at least in some markets, according to AY.  

“Concerns remain as several companies plan on disposing of large blocks throughout the region,” the report notes. It mentions Prudential's pending vacating of its Newark space as it  consolidates into a new build-to-suit facility and also Goldman Sachs' available office space on the Jersey City waterfront and Hertz's emptied-out headquarters in Park Ridge.

In central Jersey, the vacancy rate at the end of the quarter was 18.6%, virtually unchanged from 18.7% during the previous quarter, but much improved from 20.5% one year ago.

Lease renewals dominated activity. Four leases were signed for more than 100,000 square feet in Piscataway/Somerset, Princeton South, I-78 East/I-287 Corridor, Monmouth East and Metro Park/Woodbridge.

AT&T signed the largest renewal lease during the quarter, for 275,000 square feet at 30 Knightsbridge Road in Piscataway. In Princeton, engineering and construction firm URS Corporation renewed its lease of 234,160 square feet. In Metro Park, Real Estate Mortgage Networks signed a new lease for 50,000 square feet.