Back in the Paleozoic Era of education (aka the 20^th Century), the Three Rs used to be “reading, writing and ‘rithmetic.” In real estate these days, the three Rs are Retention, Relocations and Restructurings, according to Grubb & Ellis’ 4^th Quarter Northern and Central New Jersey Office Report.

Companies fleeing to quality space led to nearly 1.3 million square feet of space being absorbed in Northern and Central New Jersey last year, compared with 546,000 square feet absorbed in 2011. However, the last quarter of the year saw negative net absorption of 1.5 million square feet, the largest since 2009. The availability rate at year-end was 23.6%, compared with 23.2% at the end of 2010, even though the year posted a net positive absorption of nearly 285,000 square feet, compared with a loss of 641,000 square feet the prior year. Grubb & Ellis forecasts a 23.5% rate for 2012.

One reason for the year-end dip was companies restructuring and consolidating their space along the Hudson Waterfront, which saw a two percentage point increase in availability to 9.4%. Meanwhile, other companies are moving to more affordable and often upgraded space, such as Ansell Limited’s move from Red Bank to Metrotop Plaza II in Iselin. In fact, the MetroPark submarket posted positive absorption in 2011, with 199,500 square feet absorbed in the fourth quarter (most of it in the Class A Space). The result was a net positive absorption of 240,000 square feet in the area by year-end.

What should help long term is the lack of speculative development, which declined year over year: just 153,000 square feet of speculative space was under construction at the end of 2011, compared with 364,000 square feet in 2010.

“The relatively empty construction pipeline will allow current availabilities to be absorbed more rapidly, once companies revert from consolidation to expansion mode,” the report says. “The transitional market conditions will encourage flight-to-quality opportunities for companies seeking to upgrade their space needs.”