New Jersey employers eliminated 61,400 positions in the past 12 months, or 1.6% of payrolls, says Michael Fasano, vice president and regional manager of the New Jersey office of Marcus & Millichap Real Estate Investment Services. Layoffs peaked during the preceding year, when 176,100 employees were let go. Blue-collar sectors have been hit hardest by economic turmoil, though the pace of layoffs has begun to slow. "In the most recent 12-month period, construction and manufacturing employers shed a total of 35,500 jobs, or an aggregate staffing cut of 8.5%," he says, adding, "In the previous year, head counts in these sectors were slashed by 55,400 positions. The health services sector has expanded by 12,300 workers, or 2.1%, since the first quarter of 2009. Roughly 6,500 jobs were created in the segment during the previous one-year stretch."

Although government payrolls have gained about 5,000 positions in the past year, changes to the state budget will cut discretionary, nonpermanent funding to cities, hospitals, school districts and public universities. As a result, says Fasano, "a significant but indeterminate number of jobs will likely be cut during the second half of 2010."

Confronted by the challenging economic conditions, many business sectors remain reluctant to make significant capital and labor investments, which has translated into a diminished appetite for additional real estate requirements. After slipping to 22.6% at year-end 2009, the Northern and Central New Jersey overall office availability rate eclipsed 23% during the first quarter, says Grubb & Ellis vice president and client services manager Stephen Jenco, who authored the report. Nearly 35.6 million square feet of direct and sublet space was available in the office market in early 2010 compared to 32.1 million square feet being marketed one year ago.