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SADDLE BROOK, NJ-”The transformation of New Jersey’s economy from a manufacturing one to an information-based and services economy has turned the current cycle into one of the strongest we’ve ever experienced,” according to Patrick Murphy, executive director of Insignia/ESG’s New Jersey operations, based here. The caveat, however, is that “we foresee this boom continuing if the US economy stays strong.”

For office space in particular, according to a third quarter report just issued by Insignia/ESG, the statewide average vacancy rate for all office property types (A, B and C) is 9.84%. A year ago at this time, the rate was 12.75%. The drop is a reflection of the fact that the submarkets making up the northern and central parts of the state have seen total leasing velocity of 11.7 million sf for the first three quarters (compared to 6.02 million sf for the same period last year), with net absorption standing at a remarkable positive 2.6 million sf (compared to negative net absorption of 1.6 million sf last year). The market totals just less than 146 million feet, with an average asking rent of $24.34, according to Murphy.

Murphy credits the level of activity to “the overflow from the tight New York market, pent-up demand from tenants already located in New Jersey and, again, the continued strength of the national economy.”

And how about these for vacancy rates: the submarkets with the lowest availability include the Hudson River Waterfront (0.41%) and the Route 17 Corridor (0.95%). Others on the low end, according to the report, are Central Bergen County (4.38%), Princeton (5.1%) and the Garden State Parkway Corridor (6.13%).

Largest leases during the third quarters of this year were Chase Manhattan Bank’s 1.14 million sf in Jersey City, Exodus Communications’ 250,000 sf in Parsippany, and AIG’s 225,000-sf lease in Berkeley Heights. The largest blocks of space returned to the market during the period were by Aventis Pharmaceuticals, just over 340,000 sf in Parsippany; and Covance, 160,000 sf in West Windsor, in the Princeton area.

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