"As was to be expected, economic instability continued into the first quarter of 2009, further impacting the Northern and Central New Jersey office markets, which continue to struggle through the economic downturn," says Jeffrey Hipschman, senior managing director, CBRE. However, he tells GlobeSt.com, "We are still seeing significant windows of opportunity for both tenants and owners alike, particularly in Montvale/Woodcliff Lake, Meadowlands and Suburban Essex/Eastern Morris submarkets, which experienced the largest amount of leasing activity in the first quarter. Overall, we remain confident in the relative strength of New Jersey's office markets."
Market fundamentals in the Northern and Central New Jersey office market for the first quarter of 2009 kept pace with national trends, closing with a 402,000-square-foot decrease in leasing velocity from last quarter, totaling 1.06 million square feet for the quarter, with the largest amount of activity found in the Montvale/Woodcliff Lake Market--160,000 square feet; Meadowlands--150,000 square feet; and Suburban Essex/Eastern Morris--150,000 square feet.
According to CBRE, this marks the second consecutive quarter in which the Waterfront submarket failed to crack the top three submarkets for leasing activity. However, renewal activity in New Jersey's Northern and Central office markets continued at a steady pace overall, a clear indication that tenants are staying in place in an effort to conserve capital.
In addition, availability rates rose from last quarter, closing at 20%, the first time the market has hit 20% since 2004. High quality assets were closer to equilibrium, with availability hitting 14%, a significant differentiation between high-end facilities and the overall market. Submarkets with the lowest availability rates included Route 17 Corridor--9%; the Waterfront--10%; and Montvale/Woodcliff Lake--11%.
Furthermore, net absorption totaled a negative 1.25 million square feet, a decrease of 1.2 million square feet from the first quarter of 2008. New blocks of space contributed to the negative absorption, which included 409,175 square feet at 111 Sylvan Ave. in Englewood Cliffs--Palisades submarket; 254,640 square feet under construction at 115 Wood Ave. South in Iselin--Parkway Corridor submarket; and an additional 192,000 square feet at 520 Broad St. in Newark--Urban Essex submarket.
"Clearly, the New Jersey office market has felt the impact of the national credit crisis at the close of the first quarter 2009, with asking rates dropping, availability increasing and an overall decline in the leasing velocity," Hipschman says. "However, despite the challenges in the office sector across the tri-state area, high-end facilities will continue to come on the market at competitive prices, allowing owners to better position themselves as market conditions begin to level off during the next three quarters of 2009."
According to CBRE research, top transactions during the first quarter of 2009 include Children's Place's 119,979-square-foot lease at 500 Plaza Dr. in Secaucus; Eisai Medical Research's 118,006-square-foot lease at 155 Tice Blvd. in Woodcliff Lake; Cognizant Technology Solutions' 71,821-square-foot lease at 500 Frank W Burr Blvd. in Newark; IDT Corp.'s 65,000-square-foot lease at 550 Broad St. in Newark; and Saiber, Schlesinger, Satz & Goldstein LLC's 56,450-square-foot lease at 18 Columbia Turnpike in Florham Park.
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