EAST RUTHERFORD, NJ-The good news continues for Northern and Central New Jersey’s commercial real estate market, with the latest Cushman & Wakefield first-quarter report indicating improved fundamentals in both the office and industrial sectors. “Renewed confidence can be felt throughout the real estate market,” says Gil Medina, C&W’s executive managing director for New Jersey.
Office tenants leased more than 1.3 million square feet of office space in Northern New Jersey, up 11% from Q1 2010. The Hudson waterfront accounted for more than 34% of the activity, C&W notes.
At the same time, Central New Jersey lease transactions rose nearly 20% over the year-ago period, with Middlesex and Morris Counties dominating, the firm reports. “The largest increase in job growth in New Jersey occurred in the professional and business services sector, where 3,300 new jobs were added in February alone,” Medina says. “If this trajectory continues, New Jersey’s office markets are primed to see even healthier leasing activity in the coming months. However, we still are looking at a glut of space in the region. This needs to be absorbed before vacancy rates and rents will show marked improvements.”
The overall vacancy rate in Northern New Jersey was 17.1%, down 0.2 percentage points from the end of 2010. Central New Jersey’s rate remained flat at 21.2%. Asking rents declined slightly from the previous quarter, with Northern New Jersey’s asking average rent of $25.62 per square foot, down 13 cents per square foot, and Central New Jersey’s rate of $23.06 per square foot, a decrease of four cents per square foot.
C&W’s vacancy trends agree overall with other recently released reports. Market data from CB Richard Ellis and Grubb & Ellis noted that despite increased demand and lease velocity, availability remains generally flat. Yet all three companies have seen signs of improvement. “As 2011 progresses, we expect to see rentals stabilize further,” Medina says. “In the meantime, tenants motivated by these lower rates and market opportunities will continue to drive leasing activity. As all market fundamentals strengthen, the office real estate market is poised to turn the corner into full recovery.”
The industrial market, however, has seen a huge boost, with leasing rising 62.6% over Q1 2010, C&W says, boosted by several large transactions, including I/O Data Center’s 831,417-square foot lease in Edison, NJ. Industrial vacancy now stands at 10.5%. Though rents have declined by 16-cents per square foot to $5.63 per square foot, they likely will stabilize as absorption continues and container volume at the Port of New York and New Jersey increases, Medina says.
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