SADDLE BROOK, NJ-Northern and Central New Jersey’s office market may be on the comeback, according to research reports from two leading real estate service firms. According to CB Richard Ellis’ first-quarter 2011 New Jersey Office MarketView Report, leasing velocity for the first three months of the year reached its highest rate since 2007. Grubb & Ellis, too, reported the largest volume of positive net quarterly absorption since 2007, nearly 915,700-square feet, in its Q1 Office Trends Report for Northern and Central New Jersey.
“A faint light appeared at the end of the tunnel for the Northern and Central New Jersey office market during Q1 2011, as an uptick in demand countered the additional availabilities and corporate consolidations that overshadowed the market during the past year,” Grubb & Ellis says in its report, noting that 16 of the region’s 22 submarkets reported positive absorption figures.
Average asking rents for class A space were $28.61 per square foot according to Grubb & Ellis, and $24.46 per square foot according to CBRE. And class A availability is at its lowest level in two years, Grubb & Ellis says. “Transitional market conditions encouraged flight-to-quality opportunities for companies seeking to upgrade their spacing needs while locking in favorable leasing packages,” the Grubb & Ellis report says.
However, overall availability has not declined, both reports say. CBRE reports that 33.96 million-square feet of space was available at the end of Q1, up slightly from 33.93 million-square feet available at the end of 2010. The availability rate at the end of the most recent quarter was 23.1%, notes Grubb & Ellis, compared with 23.2% at the end of the previous quarter.
One reason: Beyond the waterfront, new space continues to become available, CBRE says, offsetting leasing gains. The Waterfront has seen a healthy decline in the availability rate from 11.8% to 8.4% since Q2 2010, according to the CBRE report.
"While challenges remain, our markets continue to show signs of improvement," says Jeff Hipschman, senior managing director and head of New Jersey operations for CBRE. "Companies are choosing to remain in New Jersey and they have been hiring,” he says, citing that long-term job figures from the state’s Department of Labor show growth of 17,200 private sector jobs over the last 12 months. “It is a trend of continuing improvement over prior years and one that we expect to continue.”
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