CBRE: Asking Rents Decline in Office, Industrial Markets

SADDLE BROOK, NJ-Asking rents in both the office and industrial markets have continued to decline in Northern and Central New Jersey in the second quarter, according to CB Richard Ellis. Those rental decreases, however, are having a different impact on each sector. While the office market persists on a downward track, lower industrial rates are luring in tenants.

Due to 1.5 million square feet of space delivered in Q2, office availabilities in Northern/Central New Jersey rose to 21.5%, a record high since the firm began tracking the market in 1990. For the quarter, leasing velocity came in at roughly 865,000 square feet, a 196,265-square-foot drop from the previous quarter and down 920,000 square feet from the same time in ’08. Net absorption totaled a negative 1.6 million square feet, as several large blocks of space were returned to the market, including 142,500 square feet in Montvale; 87,650 square feet in the Jersey City Waterfront submarket; and 86,254 square feet in Parsippany.

Yet there were pockets of activity. Princeton racked up 145,078 square feet of leasing activity; followed by Parsippany with 98,554 square feet; and the 287/78 Interchange submarket which had 89,852 square feet.

Submarkets with the lowest availability rate included the Route 17 Corridor with 8%, down from 8.8% in Q1; the Hudson Waterfront at 12.1%; and Suburban Essex/Eastern Morris counties at 14%.

Notable transactions in Q2 included: Virgin Mobile’s 90,396-square-foot lease at 10 Independence Blvd. in Warren Township; Dey LP signing for 53,517 square feet at 110 Allen Rd. in Bernards Township; Metavante Corp.’s 51,000-square-foot contract at 400 Plaza Dr. in Secaucus; and Global Aerospace, Inc.’s 47,891-square-foot deal at 1 Sylvan Way, Building C, in Parsippany.

Despite the bleak outlook currently, Jeff Hipschman, senior managing director at CBRE, expects the office market will eventually turn the corner. “We believe that a recovery is on the horizon, as job losses stabilize and pricing for new listings remains ‘negotiable,’ creating opportunities for tenants and owners alike,” he says.