Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The fuel gauge needle on the Northern and Central New Jersey office market dashboard display slipped another notch lower during the third quarter in the absence of additional fuel supplied from expanding corporate real estate requirements. Against the backdrop of the sluggish economic climate, many business sectors remain reluctant to make new capital investments and instead were utilizing existing resources to boost output, thus curbing the corporate appetite for additional office holdings.

Positive absorption witnessed earlier this year in the Northern and Central New Jersey office market had since yielded to negative absorption figures, as limited demand was losing ground to additional availabilities generated by consolidations and restructurings. After posting nearly 284,900 sf of negative net absorption during the second quarter, an additional 434,500 sf of negative absorption occurred in the third quarter. This represented the highest volume of quarterly negative absorption in four years.

The Northern and Central New Jersey office availability rate subsequently eclipsed the 20% mark in the third quarter compared to 19.8 percent at mid-year. The overall office availability rate had not been above 20% since early 2007. Nearly 30.6 million sf of direct and sublet space was being marketed in the Northern and Central New Jersey office market during the third quarter of 2008 compared to 29.7 million square feet available one year ago.

With its close proximity to Manhattan, New Jersey has historically housed the back office and data center operations for many of the world’s leading financial services firms. The Hudson Waterfront is often dubbed “Wall Street West” because of the large concentration of financial related firms located in this submarket.

The recent meltdown witnessed in the credit markets that have claimed such investment titans as AIG, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley is anticipated to initially impact the unemployment rate as companies reduce their payrolls in the months ahead. While the New Jersey unemployment rate climbed to a five year high of 5.9 percent in August, current unemployment figures do not reflect the recent turmoil engulfing the credit markets. The financial services sector employs nearly 270,000 workers in the Garden State and occupies more than 20 million sf of office space. Many economists anticipate that financial-related job losses could be well above the 16,000 jobs that New Jersey has shed in all sectors since the beginning of the year.

Employment losses are likely to be followed by the consolidation of excess office space. A rising wave of available sublease space is often the byproduct of such consolidations. While nearly 6.7 million square feet was being marketed for sublease in the Northern and Central New Jersey office market during the third quarter of 2008, the volume of sublease space could trend higher in the coming year as firms re-examine their real estate holdings in an effort to reduce operating expenses.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.