PARSIPPANY, NJ-Despite some large deals signed in recent months, vacancy and rental rates remained fairly flat in the New Jersey office market, according to Colliers International New Jersey’s fourth quarter report.
One reason: smaller deals are still slow to be completed, says Matt Dolly, senior managing director of the Research & Analytics Consulting Group, Colliers.
“There are some larger deals being done,” Dolly tells GlobeSt.com. “But we are not seeing those bread-and-butter deals, the 50,000- and 60,000-square foot deals. Companies are optimistic and we want to see that turning into deals.”
The overall office availability rate for Northern and Central New Jersey was 20.3% at the end of 2011, just slightly higher than the 20.1% at the end of the third quarter and 20.0% year-over-year. But there are some high points: Absorption had been negative in 2008 and 2009, and now some positive quarters are being seen, he points out.
“Tenants are doing a better job of trying to create jobs. The business community likes Governor Christie,” Dolly notes. “Jobs are starting to come along. The US market is getting better.”
The amount of sublease space continues to decrease and now represents just 13.0% percent of available space, the report continues. However, this level is expected to increase in 2012 as some larger tenants consolidate, placing subleased space back on the market.
Rents remain fairly static. The overall asking rent for Northern and Central New Jersey was $22.11 per square foot at year-end 2011, compared to $22.29 per square foot the previous quarter and $22.30 per square foot year-over-year.
To some degree, there is still a disconnect between landlord and tenant, “especially for landlords whose position is stable,” Dolly says. Some owners believe the market is about to spike upward, and don’t want to commit to a lower rent for 10 years. Meanwhile, some tenants are waiting for the upcoming presidential election to be resolved to make commitments.
One basic fact, however, should encourage leasing – and especially redevelopment in the state.
“There’s no room to grow here,” Dolly says. “And there seems to be more hope, more positivity this year.”
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