New Jersey office market ends 2011 with sparks of optimism despite flat results
–Business Community Senses Economic Improvement Will Finally Arrive–
NEW JERSEY, January 11, 2012 – The New Jersey office market closed 2011 with steady results according to a report released today by Colliers International New Jersey. Continuing the trend over the past year, the fourth quarter market analysis showed minimal fluctuations in asking rents and availabilities.
“Despite limited growth in the office market in 2011, cautious optimism has been the name of the game mainly because we didn’t see any significant losses either,” said Matt Dolly, head of research for Colliers International New Jersey. “We think that 2012 is going to be a better year as corporate and consumer confidence starts to creep back in, driving more leasing activity. Since the fourth quarter of 2010, we mostly saw companies moving their space and locations either to downsize or upgrade space, but we will need company growth across the board for there to be an impact.”
The overall office availability rate for Northern and Central New Jersey was 20.3 percent at the end of 2011, just slightly higher than the 20.1 percent at the end of the third quarter and 20.0 percent year-over-year. The amount of sublease space continues to decrease and now represents just 13.0 percent of available space, and while the total square footage of available sublease space is at its lowest level in three years, its proportion to overall available space is at its lowest level in 10 years. However, this level is expected to increase in 2012 as some larger tenants consolidate, placing sublease space back on the market.
During the past quarter, there has not been much change in rental rates and concession packages available to qualified tenants, with the exception of landlords with little or no debt moving asking prices even lower. The overall asking rent for Northern and Central New Jersey was $22.11/sf at year-end 2011, compared to $22.29/sf the previous quarter and $22.30/sf year-over-year. In some cases, owners are looking to sign only short term deals of five years or less, as they expect the market to improve significantly over the next few years. Tenants, on the other hand, are still willing to commit to longer term deals and possibly relocate for the right space or if they can take advantage of incentive programs.
“Market players are all looking to 2012 with a great deal of anticipation,” Dolly said. “Many companies are waiting for the upcoming presidential election to set the market tone. Unemployment still remains a huge concern, but it seems that the business community overall genuinely expects the economy to finally improve this year, and New Jersey is doing a better job of attracting and keeping business.”
Other highlights from the fourth quarter 2011 market report include:
- Colliers International arranged a renewal for Greenbaum, Rowe, Smith & Davis, LLP for 58,774 square feet at 99 Wood Avenue South in Iselin
- Colliers International arranged two new leases for PSE&G during the quarter, one in northern New Jersey for 84,564 square feet at 440 Eagle Rock Ave in Roseland and in central New Jersey for 55,775 square feet at 40 Cragwood Road in South Plainfield
- Realogy Corp. announced their relocation with a 270,000-square-foot long-term lease from its corporate headquarters at the “Prudential Campus” in Parsippany to Hampshire’s redevelopment of an old Verizon facility on Park Avenue in Florham Park
- PNC Bank signed a long-term lease extension for 131,000 square feet at Tower Center in East Brunswick
- Prudential is considering a $250.8 million Urban Transit Hub tax credit from the NJEDA for a proposed 600,000 square foot office tower across from NJPAC, potentially leaving behind 922,000 square feet at Gateway Center
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About Colliers International
Colliers International is the third-largest commercial real estate services company in the world with 12,500 professionals operating out of more than 510 offices in 61 countries. A subsidiary of FirstService Corporation (NASDAQ: FSRV; TSX: FSV and FSV.PR.U), it focuses on accelerating success for its clients by seamlessly providing a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research. Commercial Property Executive and Multi-Housing News magazines ranked Colliers International as the top U.S. real estate company and the latest annual survey by the Lipsey Company ranked Colliers International as the second most recognized commercial real estate brand in the world.