The New Jersey office market was still recuperating after Oct. 29^th's Hurricane Sandy, says Jeffrey L. Heller, A-Y's managing director in New Jersey, and coping with a wave of corporate consolidations. He said positive indicators came from “tenants in search of live-work-play vibrancy and accessibility” in downtown areas to attract companies' younger workers.

There was a slight increase in the overall vacancy rate to 21.4% in Q1, by A-Y's calculations. A-Y had put the rate at 21.2% at the end of 2012. Average asking rents also dipped slightly to $22.38 per square foot, from $22.59.

In the northern part of the state, the vacancy rate rose to 22% - “peak level” - in Q1, according to A-Y.

Large blocks of space were vacated on the Hudson Waterfront by UBS and Marsh & McClennan. In addition, Goldman Sachs has announced it will be vacating a portion of its space at its Jersey City office tower, the tallest office building in New Jersey, A-Y's report notes.

Zoetis, Pfizer's animal-health company spinoff, signed the largest lease during the quarter, taking 98,105 square feet at 100 Campus Drive in Florham Park. On the negative side, Pfizer plans to vacate all of its space at Giralda Farms in Madison.

Similarly, Honeywell's decision last month to remain in the state by relocating to Morris Plains was positive. However, its Morris Township office will be vacated and likely will require redevelopment.

The Central New Jersey office market “continues to stabilize,” says A-Y. The overall vacancy rate remained at 20.3%, where it has stayed for a year. Asking rents, declined more than a dollar during the period, though, to $21.75 per square foot.

“Demand in the pharmaceutical sector, especially along Einstein Alley in the Princeton corridor, is leading much of the activity,” the report says:

• · Covance renewed two leases at Carnegie Center for a total of 225,000 square feet and expanded by an additional 9,000 square feet.
• · Otsuka also leased space at Carnegie Center, and will occupy a total 80,000 square feet. The company is leaving behind a long-term 102,000-square-foot sublease at University Square, but is believed to be hunting for additional space in this market.

Dr. Reddy's Laboratories signed new leases totaling 105,000 square feet at College Road