SADDLE BROOK, NJ-Through the end of May, there were only four office leases of more than 100,000 square feet in New Jersey – half as many as last year at this point - according to CBRE. Based on this, the real estate company’s forecasters said Monday they project fewer large transactions to occur this year than last.
In all of 2011, there were 23 lease or renewal transactions for properties larger than 100,000 square feet. “We do see that the market in 2012 is being carried by small-to-mid-size deals in the range of 10,000 to 50,000 square feet,” says Leo Paytas, senior vice president, CBRE New Jersey. “This could mean smaller companies who have been sitting on the sidelines are now looking to capitalize on new opportunities.”
Various market specialists have noted there is fairly brisk business for smaller office space in well-located newer or recently updated buildings in northern New Jersey.
Through the end of April, market activity was down overall, though, to levels not seen since 2009, according to CBRE’s report – mainly because of a sharply reduced number of renewals. Leasing velocity was down a bit, by 4.9 % compared to the same period in 2011 and by 12.6% compared to 2010.
But combined leasing and renewal activity in 2012 was 26.0% less than 2011 and 19.6% less than 2010.
“With over 33 million square feet of office space available, the New Jersey market can accommodate most space requirements,” says Paytas. Yet, tenant demand is concentrated heavily on smaller spaces.
So far this year, 54 % of all transactions were in the 10,000-20,000-square-foot range; that compares with 49 %in that range last year. Another 20 % of deals were for 40,000 square feet or more, while last year 27 % of deals were that size.
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