TRENTON, NJ-The condition of the state's economy and condition of commercial real estate got somewhat different assessments Tuesday, despite the fact the two realms are inextricably connected. Of course, one report came from the state's top politician, while the other was a market analysis delivered by brokers looking at year-end numbers
In Gov. Christopher J. Christie's State of the State address, which focused mainly on the impact of superstorm Sandy on the economy, he said the storm was highly disruptive: "Cars weren't bought, homes weren't sold, and factories couldn't produce.”
The governor asserted the state economy can “catch up,” although he avoided using the word “comeback," his State of the State mantra from the year before. He also pointed to discernible progress with post-recession recovery in 2012, pointing out for example, that “unemployment is coming down.”
The jobless rate has dipped slightly in recent months, but at 9.6%, is still much higher than the national rate of 7.8.
Just a few hours before Christie's mid-afternoon address, a top team of executives from Cushman & Wakefield, speaking at a live “webinar,” outlined how seriously New Jersey has “underperformed” when it comes to employment compared to the nation since the recession began in 2009 (see chart), and how severely that has affected the market.
While C & W's chief economist Ken McCarthy said the company projects good progress for the national economy starting in the second half of this year, and a strong 2014, Gualberto “Gil” Medina –the company's top executive in New Jersey - said the state economy was likely to continue lagging behind the country's for several more years.
He was blunt about this being distressing news, particularly for the commercial office market. Over the last five years of a difficult state economy, Medina noted, the state wound up with a total of 5,000 square feet less under lease.
“If there is any cause for optimism,” he added, “it is that there has been very little construction.” He wryly described it as “unfortunate that we have to take solace in the fact there has been little office construction in New Jersey.”
Capital markets specialist Gary Gabriel expressed similar back-handed “optimism.” He said the best thing to say to investors to lure them to invest in northern New Jersey office space right now is: “It's the ultimate contrarian play.”
“We are coming back,” he added. “We have the ultimate location, we have the most pro-business governor.”
New York State's economy recovers at a faster pace, it will help New Jersey's economy to pick up. The education, health, and technology sectors in the state also show potential for spurring growth in the real estate markets, they said.
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