Market Report: NJ Boom is Still On

SADDLE BROOK, NJ–While the cautious among us continue to warn that the real estate market has to slide back down eventually, the parade of mid-year market reports coming out of New Jersey seem to indicate that it won’t happen any time soon. The latest evidence is found in a mid-year report from Insignia/ESG, which has its New Jersey home base in Saddle Brook.

Indeed, the report calls the current state of the market “one of the greatest booms in recent history. The market’s leading indicators of supply and demand continue to trend in conversely opposite, but positive directions.”

In hard numbers, office space availability has fallen to 10%, down nearly three points from a year ago, this despite the fact that developers added some 1.14 million sf of new office space just in the first half of 2000. Leasing velocity zoomed to 7.28 million sf, a 63% increase over 1999′s first half volume of 4.47 million sf. Net absorption, another key indicator of the market’s health, is a positive 2.57 million sf at mid-year 2000, a startling reversal from a year ago when the market experienced negative net absorption of 1.48 million sf.

With the tightening market comes another obvious trend–rising rents. A year ago at this time the average was $23.53 psf; now, the average is $24.15.

In terms of submarkets, the strongest ones are the obvious choices for anyone following NJ real estate. In Northern NJ, the most leasing activity occurred along the Hudson River waterfront (1.25 million sf); Parsippany (870,000 sf); Urban Essex County, including Newark (500,000 sf); Central Bergen County (360,000 sf); and Route 23/Paterson/Wayne (also 360,000 sf).

In Central NJ, meanwhile, busiest were the I-287/78 Interchange (one million sf), I-287/Piscataway/Brunswicks (640,000 sf), and the Garden State Parkway Corridor (360,000 sf).

Among the largest lease transactions were Datek (422,000 sf in Jersey City); Merrill Lynch (302,000 sf in Jersey City); New York Life (256,750 sf in Parsippany); Motorola (244,000 sf in South Plainfield); and Verizon Wireless (210,000 sf in Warren Twp.)