Cities and suburban markets in the Mid-Atlantic show a common trend. Generally, absorption is positive, vacancy rates are declining slowly and rents are steady or rising slightly. Large transactions tend to be renewals or relocations within the local market.

While the trend is modestly positive from an overall economic standpoint, modest is the operative word. Tenants are cautious, jobs drive activity and cost-effectiveness is a dominant theme. Class A space tends to report higher vacancy than class B space in each market, with a desire to conserve funds and reduce occupancy costs.

Northern New Jersey reports the largest vacancy rate among the markets we survey. At 14.9%, it's well above the equilibrium rate at the end of 2011 and slightly higher than the thirdquarter vacancy rate. Average asking rents also declined. Prudential, one of Newark's largest tenants, plans to remain in the market, but seeks to move from its long-term Gateway Center to a new tower it plans to build on Broad Street, just a half mile away. The cost of keeping Prudential in town is a reported $250-million tax credit awarded by the New Jersey Economic Development Authority, but ownership of Gateway Center is reportedly suing Prudential over the move, seeking to avoid a long-term vacancy at the Center. And New York's loss was Northern New Jersey's gain when the Depository Trust and Clearing Corp. decided to relinquish most of its space at 55 Water St.—once over a million square feet in Lower Manhattan—for about 750,000 square feet across the Hudson in Jersey City.