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Office Flounders, Downtown Sits Pretty

MORRISTOWN, NJ-Renewal activity continues to be a focus for office tenants looking to take advantage of declining rental rates, but there's also a larger trend towards downtown development.

By Alyson Grala | Updated on August 12, 2009

MORRISTOWN, NJ-The economic recession has resulted in an increase in availability rates and a drop in asking rates throughout the Northern and Central New Jersey office market. As companies continue to look for ways to reduce operating expenses, the availability rate in the class A market increased by approximately 3% in the second quarter to 23.4 %.

Bad news for Morris County, which houses over 26 million square feet of office inventory and many of the state’s class A office parks. The overall availability rate here rose to 17.6%, from 16.4% in the first quarter and 16.3% one year ago, according to David Simon, COO, Colliers Houston & Co. in Teaneck. That’s compared to the availability rate in Central New Jersey, which rose from 18.3 % in the second quarter of 2008 to 20.7% in Q2 2009, and Northern New Jersey, which jumped from 15.2% to 15.4% over the same time period.

But while the market here houses a healthy number of class A office parks, there also exists an oversupply of outdated product primarily in the class B and C assets, says Robert Donnelly, vice chairman of Cushman & Wakefield, based in Morristown. “There is an effort being made to reposition B and C class assets, but it’s not significant because it’s difficult to finance renovations at this time,” he says.

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