Corporate real estate in NJ enjoys a stable market.
Though it could be argued that the New Jersey office market has certainly come back with a vengeance since the real estate decline of the late 1980's and early 1990's, the activity of the current revived market is ideal since leasing has increased, but not at such a frenetic rate as to drive rents skyward, which could lead to a sharp market correction.
Essentially, the New Jersey office market has reached a level of prosperity in which commercial real estate managers can be cautiously optimistic. There is product to meet demand and statewide vacancy remains at a healthy, sustainable level with no herald for speculative construction. After all, it is unrealistic to believe that single-digit vacancy rates can be permanently maintained in any market.
Though overall leasing activity is strong, tenants are increasingly savvy, have very specific requirements when selecting a building, and will exercise the options that a market with some latitude provides them. While landlords are finding they need to make few or no concessions to both retain and attract quality tenants, tenants are particularly concerned that buildings can support not only their physical space needs, but their technological requirements as well.
At Reckson, we have been "lighting up our buildings" with a technology infrastructure that allows for high-speed Internet access, video teleconferencing, and fiber-optic networks, among other high-tech amenities. We have an agreement with a communications technology services provider that tenants can choose to handle all such needs. Having this provider in place not only allows our tenants to purchase technology services at a favorable rate, but comes with the added benefit of immediate hook-up and access to a primary or redundant services specialist available at all times to troubleshoot problems and handle special requests.
Another key issue that landlords must remember is the pace at which all businesses are moving ahead today. The current unprecedented period of prosperity within the U.S. commercial real estate market is a direct outgrowth of our national healthy economy and the present U.S. position of advantage in the global market. Corporations presently can only afford to work with cooperative landlords that can assist them in quickly finding appropriate space, executing leasing agreements expediently and making arrangements for timely build-outs.
Just this summer, Reckson completed a deal with pharmaceutical giant Hoffmann-LaRoche that typifies the fast pace of the market. Hoffmann-LaRoche sought to obtain 70,000 square feet of space and be moved into that space by early fall. We met with company in July, and by August had secured a lease at the 1255 Broad Street building in Clifton, NJ. Reckson has just completely repositioned the property as a Class A facility with high-tech amenities. We are assisting Hoffmann-LaRoche with architecture, design and construction services through our own in-house departments - a key factor that allowed us to make the deal other landlords could not. The interior fit-out construction began within five days of the lease signing, and Hoffmann-LaRoche will move into its new space in October.
Because the New Jersey office market is among the most prosperous in the entire country, it is highly competitive. Despite the market's health, with today's accelerating business philosophy, a successful landlord must be willing to provide the services that anticipate the growth and advancement of the tenant's business, such as technology amenities, without sacrificing the old-fashioned ability to execute leases quickly, outperform tenants expectations on build-outs, and most importantly, provide responsive, superior management.