But the occupancy cost picture, if not actual rents, could be changing. A new report from Studley indicates that landlord concession packages are 16.7% higher than a year ago, coming in at an average of $35 per sf at the end of 2007 compared to $30 per sf at the end of 2006. And tenant uncertainty will likely remain elevated as the economy falters.

"In a softening market, landlords typically prefer to increase concessions rather than to lower face rents," says George Martin, vice chairman in Studley's Iselin office. "These concessions can drive effective rents down, creating more attractive opportunities for tenants."

Studley senior managing director Philip Lipper says that "the state still hasn't seen significant net positive absorption, as the majority of lease transactions are a result of renewals and businesses playing musical chairs. We can expect to see little increased activity in the coming year, but there will be additional opportunities for tenants to lower their expenses."

Dolly specifically points to Jersey City's waterfront market, along with Princeton and Parsippany as the strongest submarket. The largest office lease so far this year, in fact, was AXA Financial's 245,000-sf deal at Brookfield Properties' Newport Tower here in February. AXA Equitable then turned around and quickly took 100,000 sf at Hartz Mountain's 500 Plaza Dr. in Secaucus earlier this month. And in Central Jersey, Danish pharmaceutical giant Novo Nordisk, in recent days, leased the entire 167,000-sf building at 1100 Campus Dr., a Patrinely-owned building in Plainsboro.