Office: Holding Its Own

After two consecutive quarters of improved leasing activity, the New Jersey office market saw a slight increase in total vacant and sublease space in the first quarter of 2008. Although the market is, to some extent, managing to hold its own, continued layoffs and consolidations could make for a rocky year.

Vacancy rates rose slightly from the previous quarter, from 17.56% to 17.79%, but decreased from 17.95% this time last year. The vacancy rate in Northern New Jersey was 16.58%, up from 16.31% last quarter and down from 16.85% in the first quarter of 2007. Central New Jersey continued this trend. The area’s vacancy rate of 19.57% was a slight rise from last quarter’s 19.37% but lower than last year’s 19.58%.

Leasing velocity overall has slowed considerably. Companies have adopted a wait-and-see attitude regarding the economy and are seeking shorter-term deals, a situation that seems unlikely to change in the near future.