Encompassing 283.7 million square feet of mostly large distribution facilities, Central New Jersey's vacancy rate dropped to 9.8% in Q2, a significant rise from the 7.8% number charted in Q1 '08. Average asking rents slid down to $4.97 per square foot after reaching a recent high of $5.42 in Q4 '07. But as the report from Colliers Houston points out, "Effective rents have been cut even more drastically when incentives are factored in." Due to its distribution-centric nature, Central New Jersey is heavily dependant on the health of the retail market, "making it extremely vulnerable to a sustained economic downturn and a dip in consumer spending," Colliers Houston researchers note.

Notable sale and lease transactions in the Central New Jersey in Q2 were: BlackRock Realty's acquisition of a 583,376-square-foot facility at 140 Docks Corner Rd. at Exit 8A, formerly owned by J.G. Petrucci and F. Greek; TA Associates' purchase of a 277,949-square-foot facility in Somerset County from Invesco Real Estate; Korea Express' 225,162-square-foot lease at 11 Commerce Dr. W. at Exit 8A, a Seagis Property Group holding; and Mystic Logistics' 223,000-square-foot lease commitment at 147 West Manor Way at Exit 7A, which is owned by Allianz.

Houston says that the markets have hit bottom and are on the road to recovery. "When will it get back to a healthy market? It could take a good 12 to 18 months," he says. "It all depends on retail sales."