JERSEY CITY, NJ- Class A office vacancyhas risen faster in Hudson County than it has anywhere else in the northern part state over the past 12 months and now tops 30%, according to Marcus & Millichap.
The county encompasses much of the Hudson Riverfront, which had long been New Jersey’s priciest and most desirable office submarket.
Statewide, says M&M in its new analysis, vacancy has risen during the past four quarters, to 20.1%. Vacancy for Class A space rose to 22.5%.
Tenants put growing amounts of space on the market in Passaic and Morris counties as well as in Hudson County over the period.
While Hudson County’s Class A vacancy rose to 30.8%, in Passaic County Class A office vacancy dropped to 22.3%. However, the Class B and C buildings in Passaic County – older and in need of updates – had rising vacancy, increasing to 22.6%.
That made Passaic something of an anomaly, as statewide Class B/C vcancy rose over the last 12 months (to 17.8%.)
The Original Story Appears Below
JERSEY CITY, NJ-The financial services industry has turned a very cold shoulder to leasing in New Jersey so far in 2013: Cushman & Wakefield reports 53% less space is currently leased to the industry than was leased at the end of 2012.
Leasing at the Jersey waterfront has hit a “historic low,” C&W says. Financial service firms accounted for just 9.2% of the state’s leasing activity, and only 10.7% of leasing at the waterfront.
“Demand in the financial services industry has descended each year since 2009,” C&W notes in a new analysis. But this year, there has been just one substantial expansion: Bank of Tokyo-Mitsubishi added 20,649 square feet at Harborside Plaza in Jersey City, bringing its footprint to 280,000 square feet.
Even Mack-Cali‘s prime Harborside buildings are having a harder time attracting tenants. Last month, the REIT hired Jones Lang LaSalle to mount a full-court press on the waterfront office front, while the company focuses on building a multifamily portfolio. (See previous story here.)
The New Jersey waterfront area has traditionally held magnetic appeal to financial service firms because of its close proximity to New York City and excellent mass transit system. Jersey City was, for many years, known as “Wall Street West.”
The city’s waterfront did not recover as well as the original Wall Street did, however, after the national financial crises and recession. Neither was it exempted from the prevailing trends of corporate cost-cutting and more efficient use of office space.
C&W reports this daunting pattern on the Jersey City waterfront:
- From 2005-2008, financial services firms accounted for 45.5% of leasing activity in the submarket, averaging 520,000 square feet a year.
- From 2009 to now, an average of only 165,270 square feet a year was taken by financial services companies.
- In 2010, leasing dipped to a seven-year low with financial services transactions totaling less than 75,000 square feet.
- The market rebounded slightly in 2011 and 2012, but remained far weaker than in the past.
In 2012, there were only four financial services transactions at the waterfront. A 100,000-square-foot expansion by Bank of Tokyo-Mitsubishi and a 92,500-square-foot sublease by Citigroup were the big ones that year.