C&W reports steady activity in New Jersey.

The Research Services Group at Cushman & Wakefield of New Jersey in East Rutherford has issued its fourth quarter commercial real estate market reports, indicating steady improvement in the office market and a slight slowdown in industrial activity in northern and central New Jersey.

Office Market

According to the report, the northern and central New Jersey office market is one of the nation's largest and most active, consisting of more than 140 million square feet in 11 counties.

"Leasing activity marked its highest quarterly performance of the year during the past three months," noted Donald P. Eisen, senior managing director of the New York area," and at 2.7 million square feet, it was the highest quarterly leasing total since 1993."

Eisen added that total office leasing activity for 1995 increased for the fourth consecutive year, reaching 9.8 million square feet. Sub-markets which surpassed 500,000 square feet of activity this year include: Parsippany (topping the list with 1.1 million square feet), Woodbridge/Edison, the Hudson Waterfront and Princeton.

A number of industries played a pivotal role in leasing office space during 1995, with pharmaceutical, insurance and high-tech/telecommunications accounting for 30 percent of the demand and more than 60 transactions. The 94,000 square-foot Aetna Life and Casualty Group lease at 120 Eagle Rock Avenue in East Hanover, NJ, was among the most significant of these deals.

Other highlights of the Cushman & Wakefield Report include:

* The overall vacancy rate remained steady since the third quarter, ending 1995 at 19.4 percent, the best year-end vacancy rate since 1989.

* Absorption totaled 2.7 million square feet, increasing over 1993 and 1994 year-end figures by 1.4 million and 900,000 square feet respectively. The hot spot was Morris County, recording its highest absorption level since 1988, 1.38 million square feet, accounting for 68 percent of the year-end total. Morris County exceeded all other county totals for the second straight year, the only time in the last 10 years that any county has held such a distinction.

* Growth in occupancy levels was highest in Class B facilities, which came to 1.6 million square feet, or 60 percent of the year-end total.

* Rental rates have increased in all classes of office buildings, with Class A rents increasing $0.10 over the past 12 months after consistent annual declines since 1988. The overall average asking rental rate rose $0.53 a square foot, leaving it at $19.35, its highest year-end level since 1993.

Industrial Market

"As in the office sector, high-technology companies continue to play a very important role in the region's industrial market as well," said Eisen. Overall availabilities decreased by 3.9 million square feet in the region during the last year. At 59.3 million square feet, this marks the region's lowest year-end supply since 1990.

Due to consistent high demand, all space types have experienced a reduction in available space, with high-tech availabilities dipping by 1.6 million square feet, the category's lowest level in more than four years.

While 1995 has been an excellent year for the industrial sector, the market appears to have been undergoing a period of self-correction during the past six months. Available space rose during the fourth quarter for the first time in one year, up by 959,000 square feet - the largest increase in one quarter since 1993.

During 1995, market activity reached 28.7 million square feet, as annual demand increased to its second highest level of the 1990s. However, the signs of slowing that became apparent during the third quarter continued, with 60 percent of the sub-markets experiencing their lowest levels of quarterly activity. Shrinking supply and growing demand have combined to increase rental rates by 9 percent during the course of one year. The current rate of $4.46 per square foot is the highest level since 1992.

Construction Activity on the Rise

As quality space continues to dwindle, construction has doubled since the end of 1994. Eighteen properties, a total of 2.6 million square feet, are currently being built - the highest level in five years. Warehouse facilities account for 81 percent of this construction The remainder will be used for high-tech facilities. The need for customized buildings is also on the rise, creating a demand for build-to-suit projects.

"The New Jersey industrial market did very well during the first half of the year," said Eisen. "Although recent trends have indicated a slowing of activity, the market is expected to attract top-quality tenants during 1996."