But this could be the bottom of the market. “Despite the fluctuating quarterly absorption figures, the Northern and Central New Jersey office market exhibited subtle signs of improvement in 2010 compared to the past few years,” Grubb & Ellis says.

A significant portion of the negative absorption witnessed during the fourth quarter could be traced to the Morristown-area class A market, where the availability rate ballooned to 28 percent because of nearly 203,000 square feet put up for sublease by BASF at 100 Campus Dr. in Florham Park, the report notes.

Tenant optimism about the New Jersey commercial real estate market higher than in recent years, according to Colliers International New Jersey. Tenants are signing longer-term leases, with law firms particularly expanding space. “At the close of 2009, the prevailing attitude was wait until next year,” says Matt Dolly, senior managing director in the consulting group and head of research for Colliers International New Jersey. “But with the business-friendly Christie administration in place for a year now, there is renewed confidence in the private sector, suggesting that 2011 will see the advent of robust growth,” adds the locally based Dolly.

And the losses are slowing. Less than 641,100 square feet of negative net absorption took place in 2010, down from 2.1 million square feet in 2009 and 1.2 million square feet in 2008, Grubb & Ellis adds. “The decelerating volume of negative absorption could indicate that companies have completed the restructuring of their excess real estate holdings, which, combined with increased demand, would help to stabilize the Northern and Central New Jersey office market in the year ahead,” Grubb & Ellis says.

According to the Federal Reserve, US companies had more than $1.9 trillion in cash and other liquid assets at the end of September compared to $1.8 trillion in June. Cash accounted for more than 7% of companies’ total assets, which represented the largest percentage in more than 50 years, according to Grubb & Ellis. “As a result, corporate relocations and restructurings, rather than significant real estate expansions, will likely define much of the activity in the Northern and Central New Jersey office market until the highly anticipated economic rebound gains traction,” the report says.