PARSIPPANY, NJ-A more upbeat view of office market prospects this year is starting to coalesce: Now Colliers International has weighed in with a generally positive assessment.
A stable balance between supply and demand developed by the end of 2013, Colliers says in its new report. In both northern and central New Jersey, the overall availability rate and average asking rent were essentially flat from the 3rd quarter through the 4th quarter, according to Colliers' research.
Now, says Colliers' executive vice-president for the region, Robert M. Martie, the elements are in place for more major tenants to relocate here - and for major redevelopment projects to proceed with the aid of the state's amped-up tax-incentive program.
“Distressed assets are quietly making their way through the deed-in-lieu or foreclosure process, putting many old or over-leveraged assets into the market at a reduced cost basis,” said Martie. “This trend, combined with the revised Economic Opportunity Act, has created new opportunities.”
The way has been paved for office occupiers to lease or purchase space at “attractive terms, so they can spend the capital necessary to modernize or repurpose such properties,” Martie said.
In addition to the major tenants already committed to doing this in 2014 – the roofing company GAF, for example, is going to renovate Realogy's former headquarters in Parsippany – a number of redevelopment projects have or will attract build-to-suit tenants, according to Colliers' analysis.
Colliers report also noted this: “Several of the major redevelopment projects include the conversion to residential and other mixed-use properties, thereby reducing the overall office inventory, driving down availability and putting upward pressure on asking rents.
Colliers' report coincided in most aspects with Avison Young's most recent survey/analysis. The statistical calculations differed very slightly.
Colliers pegged the overall availability rate in northern and central NJ at 20.3% in the fourth quarter, up from 20.1% in Q3.
Net absorption of office space remained steady, according to Colliers: 1.08 million square feet in Q4, down slightly from 1.14 million square feet in the previous quarter and up from 926,202 square feet year-over-year.
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