Colliers report: opportunities still exist in New Jersey office market.

New Jersey's office market exceeded expectations in the fourth quarter of 2008, as vacancy rates and asking rents remain relatively static, finds a recent 2008 Fourth Quarter Trendsletter issued by Colliers Houston & Co., a full-service commercial real estate firm providing strategic corporate real estate solutions to clients on a local and national level.

"As the impact of the credit crisis on the global economy continues to unfold, various predictions have indicated that the New Jersey office market would crumble under the pressure of the global economy," said David Houston, Jr., SIOR, FRICS, CRE and president of Colliers Houston. "Closing deals in this turbulent economic climate will not be achieved without rising above significant and unique challenges. But, we believe there will be selective opportunities available to tenants, investors, brokers and landlords in the first half of 2009."

The Northern New Jersey Office market performed well in the third quarter of 2008, considering the general economic conditions, displaying relatively flat vacancy rates, rising only from 12.8% in the second quarter to 13%. The average asking rental rate for this market has also increased slightly in the third quarter from $27.01 psf to $27.07 psf. The most expensive submarket in North Jersey for the fourth quarter was the Hudson Waterfront, which posted an average asking rate of $33.21 psf. The Meadowlands submarket had the weakest performance rates, with asking rates standing at only $25.96 psf.

The Central New Jersey Office market is continuing to float through these economic rough seas, with vacancy rates rising from 15.5% to 15.7% from the third quarter, representing only a small uptick in overall availability in this market. The average asking rents showed resilience as well, rising slightly from $25.05 psf to $25.13 psf, a rate that has remained relatively unchanged over the course of the past five quarters.

Traditionally, this market has far more new construction to contend with than the Northern New Jersey office market, a trend that typically negatively impacts the area's availability rates. Through the end of the third quarter, for example, about 560,000 s/f of new space was constructed, representing 0.5% of the 103.3 million square feet of rentable building area that makes up this market, more than twice the amount of new construction than the Northern New Jersey market.

"Although there is little doubt that mounting job losses and uncertainty in the economy will negatively impact New Jersey's commercial real estate market in 2009, there will continue to be opportunities," commented David A. Simon, SIOR and chief operating officer at Colliers Houston & Co. "As an example, we anticipate an increase in early lease renewals as owners look to stabilize their assets while tenants seek to extend at favorable terms."