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EAST RUTHERFORD, NJ-Signs of a strengthening New Jersey economy, including unemployment that fell below the national average to 4.1% in February, has brought some optimism to commercial real estate at the beginning of Q2 2007, a new report from Cushman & Wakefield of NJ says. Despite Q1 leasing totals slightly lower than last year, more office tenants are exploring the market, according to C&W’s local research team.

In North Jersey, the overall vacancy rate dropped slightly during the past 12 months, from 17.9% to 17.2%, according to C&W. “Overall asking rents have remained steady, but landlords remain aggressive to lure creditworthy firms,” says Gil Medina, executive managing director of C&W’s New Jersey operations. “Tenants continue to explore the Hudson waterfront to find less expensive space alternatives to the tightening Manhattan market.”

Leasing activity in North Jersey registered 1.4 million sf during Q1, highlighted by Mack-Cali Realty’s agreement to develop a 250,000-sf, build-to-suit HQ for Wyndham Worldwide Corp. on Sylvan Way in Parsippany.

In the state’s central counties, the overall vacancy decreased from 19.3% at the end of the Q1 2006 to a current 18.6%. The largest lease was executed by Qualcomm–the telecom firm took 95,579 sf at the long-vacant 500 Somerset Corporate Blvd. in Bridgewater.

“Healthy demand continues within the Metropark and Monmouth County markets, where available product remains sparse,” Medina says. “Yet while more tenants are targeting space within the I-78 corridor, excess inventory from telecom firms have kept overall vacancy rates in the I-287 corridor above the 30% threshold for the fifth straight year. Princeton remains the epicenter for new development, but minimal absorption of new product there is prompting some concern. Looking ahead, the Central New Jersey overall vacancy rate likely will rise unless that space leases.”

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