City slickers hit the suburbs as market takes off.

Opportunity is knocking in New Jersey's real estate arena and New York City's major firms are not about to get caught on the hop as this sleeping giant awakens, according to industry experts.

After a period of tremendous activity in 2004 and 2005, city players such as Cushman & Wakefield, Trammel Crow Company, Studley, GVA Williams and CBRE have all expanded their operations and drafted some of the biggest names in the business to the Garden State.

According to Gil Medina, the former New Jersey secretary of commerce who became executive managing director and head of Cushman & Wakefield's New Jersey offices last year, it's all about being armed with the very best services and people to cater to growing demand for real estate services in the state.

"Companies involved in the real estate business seem to be reaching out for people from other fields and trying to recruit more talent," said Medina.

"This is a reflection of the fact that New Jersey represents a very large, strong economy with a lot of opportunity. Obviously, real estate service providers are positioning themselves to reflect the importance of the New Jersey marketplace, which is why we're seeing a tremendous amount of consolidation and a significant amount of recruitment. We're all trying to secure people with diverse talent and a diverse work-force to reflect dynamics of the economy."

Last year, Cushman & Wakefield New Jersey added former CBRE hotshots, Kimberly Brennan, managing director, and Robert Rudin, executive vice president, to its roster of talent and expanded its Central New Jersey offices to a 5,500 s/f facility in Edison.

Joseph Caridi went to Newmark Knight Frank as executive director of its New Jersey offices, after previously serving as COO of Ivy Realty Services, and Jones Lang LaSalle wooed former CBRE leasing director, Susan Mason, to their ranks last September.

With its New Jersey offices all at capacity due to an upsurge in business across the board, Studley relocated its Edison office from 5,000 s/f at 333 Thornall Street to 8,000 s/f at Metro Corporate Campus in Iselin. This year, it expects to relocate its Rochelle Park officers to a bigger space.

There's been a flurry of new faces at Trammell Crow Company, too. Star brokers, Jeffrey Heller, executive vice president, and William McCaffrey, defected from Cushman & Wakefield of New Jersey, to be part of the TCC growth strategy.

"We're certainly seeing companies building up as a trend," said Ken Flynn, senior vice president of Trammell Crow. "Firms are looking to attract seasoned people because the client base demands seasoned people."

Indeed, movement in the Class A and A+ office space categories is expected to be the biggest trend in New Jersey this year.

The direct vacancy rate for Class A product in New Jersey is at 13.9%, one percent behind the direct vacancy rate for all Class A, B and C buildings. As companies swallow up Class A space, and the economy continues to strengthen, speculative development has become all the rage.

"There's confidence in the market," said Joseph Caridi, executive direct at Newmark Knight Frank. "This is shown by major developers in Jersey, for the first time in years, doing speculative buildings. If it's the right building, in the right place, companies are going to come.

"We haven't had that type of thinking in a long time. There's definitely a general belief that corporate expansion is on the horizon."

Among the major speculative projects in the works are Reckson Associate's 313,000 s/f Reckson University Square in Princeton and the Gale Company's 500,000 s/f of office space in Parsippany.

According to Cushman & Wakefield's 1Q06 report, there is nearly 1.2 million s/f of new office construction underway in New Jersey, up from only 180,000 s/f a year ago. While central New Jersey, especially Princeton, has been seeing most of the speculative building, northern New Jersey has seen activity in build-to-suit projects.

Japanese pharmaceutical company, Eisai Inc., is having a 209,000 s/f facility built in Woodcliff Lake and Novartis is having a nearly 300,000 s/ f building constructed on its campus in East Hanover.

Some smaller projects include a 76,000 s/f facility for a designer and manufacturer of civil flight simulators and visual systems in Whippany and a 50,000 s/f headquarters for IEEE Union in Parsippany.

There are also currently 2.7 million s/f of industrial projects under development. Eighty percent of these developments are slated for central New Jersey. A 374,148 s/f warehouse facility was completed in Edison. Opus East LLC recently broke ground on a 471,200 s/f speculative warehouse building on Route 526 at Corporate Boulevard; Matrix Development is nearing completion of a 600,000 s/f distribution facility in Hamilton; and a 341,000 s/f distribution facility in Avenel.

Among the other high profile projects either planned or under construction in the state are Trump Plaza in Jersey City, a twin-tower residential development set to break ground in the Fall.

Dewitt Tishman LLC is the architect for the $415 million project that is a partnership between Donald Trump and developer, Dean Geibel. It will include 23,000 s/f of retail space.

And work got underway this month on the entertainment and shopping portions of the highly publicized Xanadu lifestyle development being built along Route 3 at the Meadow-lands in northern New Jersey. The 4.8 million s/f complex is being developed by the Mills Corporation in conjunction with Mack-Cali.

Robert K. Futterman & Associates is serving as retail advisor for Xanadu. The company is currently working on 10 such lifestyle developments, which include residential, office, entertainment and retail portions, across the country. Of these 10 projects, three, including Xanadu, are located in New Jersey. The others are the 750,000 s/f Town Place at Garden State Park in Cherry Hill and The Shops at Riverside in Hackensack. According to Medina, the strengthening economy will be a major factor in the Jersey real estate market's performance this year.

Pointing to the state's steady 4-5% unemployment rate, Medina said that, as unemployment continues to drop, the vacancy rate will follow.

"The labor force utilization rate is very high and what we're basically seeing is a sustained low unemployment rate," said Medina.

"This would seem to indicate that, sometime in the near future, we're going to see greater utilization of an under-utilized workforce in the state. That would tend to indicate that there's going to be an investment in new product on the market or elimination or substitution of old product.

"The New Jersey market seems to be poised for a period of growth. US corporations have a lot of cash on their balance sheets. This number is really at historic highs, over $6 billion, and our anticipation is that cash is going to be invested in real estate."

New Jersey currently ranks number four among the nation's 100 top locations for company headquarters. The economy is also one of largest in country, with $430 billion in gross state product, ranking it number eight in the nation.

However, not everyone is excited by the rate of development in Jersey. According to Robert Bull, senior managing director at Studley, between Route 1 and Route 295 in Princeton there are over 600,000 s/f of new projects.

"Take it one step further; there are two new buildings on spec in New Town, Pennsylvania, just over river," he said. "So there is 1 million s/f of new, [speculative] development between Bucks County and Princeton, either up, planned or under construction."

Bull is perplexed because he said he doesn't see the Princeton market as being especially hot. Campus Drive, Reckson University Square and an office development project by Hilton Realty Co.--all Class A buildings under construction or just finished in Princeton--will create an extra 620,000 s/f that, so far, has no tenants, or the prospect of one. In fact, Campus Drive has been completed and empty for nearly five months.

"Developers are thinking there's no Class A product and if the market comes back, then they're ready to rock and roll," Bull said.

"Anyone who says the market is hot, from my perspective, I don't see anything."

Bull maintains that when all of this speculative space is completed, there could be a vacancy of over 20% in the Princeton market.

According to GVA Williams of New Jersey's First Quarter Market report, the overall vacancy rate in the state is 17.93%, down from 17.97% last year, but slightly up compared to 17.92% at the end of the fourth quarter 2005.

Statewide, average asking rents have increased only slightly, from $24.19 at year-end 2005 to $24.25 at the end of the first quarter 2006.

"Basically, the overall vacancy rate is kind of leveling off," said Matthew Dolly, director of research and marketing at GVA Williams New Jersey.

"The vacancy rates have been staying between 17% and 19% the past couple of years. At the year end it was 17.9%. I think it's probably going to stay relatively flat [this year.]"

However, Dolly is still extremely optimistic about the market.

He said, "With the change in [state] government and the long-term impact of Hurricane Katrina, there has been a lot of uncertainty about the future, but there are a lot of large companies out there looking for space."