Office Market: The Waiting Game

PARSIPPANY, NJ-Overall availability increased from 20.51% in first quarter 2008 to 21.44% in Q1 2009, according to new stats from FirstService Williams’ New Jersey office. Meanwhile, the average asking rent decreased from $24.52 to $24.46 during that same time period. Surprisingly, sublease now represents 20.39% of total available space, decreasing from 22.95%.

According to Matt Dolly, FSW’s New Jersey-based managing director of research and marketing, the market is still in “wait-and-see” period until it is clear which direction the economy is going. He tells GlobeSt.com that we’ve yet to see the bulk of expected new sublease space. “While we are seeing pockets of shadow space, there haven’t been a lot of reductions in space just yet, but it seems imminent.”

While there is a perception by tenants that the market will continue to struggle in the near term, Dolly says that there has been a noticeable uptick in activity in the last 30 to 45 days. “More tenants in the market are going out early, but this may result in two to three year early renewals/extension,” he says. Many tenants are reducing the term on their deals and looking for better deals on renewals, with “blends and extends” also becoming more prevalent.