Employment numbers bode well for state market.

The Northern/Central New Jersey office market continued to experience improvement through the second quarter of 2005 due to positive job growth in the state, according to the findings of CB Richard Ellis' 2nd Quarter Marketview and the Summer 2005 New Jersey Office Update by Torto Wheaton Research, the provider of research services to owners and investors in the U.S. and Canadian commercial real estate markets and a business unit of CB Richard Ellis.

According to TWR, in the last four quarters, Northern & Central New Jersey/New York City's total employment level has grown by 1.0%. Total employment in the area is forecasted to grow 1.2% in the next two years. The office short-term forecast calls for overall positive growth in office workers through year-end 2005.

"Momentum in the job market is beginning to show in real estate fundamentals. There is little reason to fear a quick end to the expansion. This all points to continued positive absorption of space, rising rents and declining vacancy. The outlook for the economy is quite positive but it is also important not to expect anything much better than the current pace of expansion," said Craig Thomas, vice president and director of research with Torto Wheaton Research.

These trends are positively affecting the office market, as CB Richard Ellis' market analysis demonstrates. As job growth in office employment continues to increase in 2005, the effects on the Northern/Central New Jersey office real estate market are beginning to be felt. First and second quarter leasing velocity combined equates to over six million s/f, which if demand continues at this pace for the next two quarters means 2005's annual total will surpass annual velocity totals each year from 2001 to 2004. Strong tenant demand resulted in the total amount of available space dropping by more than two million s/f from a year ago and the availability rate decreasing several percentage points to 18.5% as of the second quarter.

Two other leading market indicators--net absorption and average asking rents--are also showing positive trends, which indicates that the market's expansion is truly underway. Net absorption totals over 2.5 million for the first and second quarter combined, which is the first year in more than five years that the market is experiencing sustained positive absorption. With the market tightening, the average asking rent is increasing for the first time since 2001.

The second quarter average asking rent of $24.45 per s/f represents an increase by $0.31 from the first quarter 2005 and by $0.49 from a year ago, indicating rents have recouped losses and are on their way up.

"Solid economic expansion nationally and exemplary job growth locally will continue to positively affect real estate fundamentals," noted Patrick Murphy, executive managing director of the New York tri-state suburban markets with CB Richard Ellis. "New Jersey's outstanding labor pool, excellent infrastructure and overall quality of life place this state in a fantastic position to experience strong growth and economic fundamentals for the foreseeable future."