Grubb & Ellis Jersey report says 2000 is one for the record books.

Grubb & Ellis has released their first half Northern and Central New Jersey Office, Industrial and Retail Market Reports. The Reports are compiled by the company's in-house research department in its Fairfield offices. The Market Reports provide an analysis of the overall vacancies, rental and absorption statistics as well as highlights of important recent transactions.

If the first half of the year is any indication of the future course of the state's real estate market, then the year 2000 will clearly be remembered as a period in which the office market sizzled, with low availability rates and rising asking rental rates.

Unprecedented requirements for large blocks of Class A space pushed the Class A availability rate below 12 percent by the second quarter of 2000, which represented a 2.2 percent decline from the previous quarter, the lowest it has been since 1997, when the rate was 9 percent. Grubb & Ellis reports. that the difference between these two periods is that there was virtually no speculative construction taking place in 1997, while in the last three. years new speculative construction has added more than 5 million square feet of Class A space to the office inventory. Approximately 1.5 million square feet of Class A. space has been absorbed in the last three months, as reported by Grubb & Ellis.

According to Grubb & Ellis, the industrial market continues to follow the same positive trends that were present during 1999. By the middle of 2000, the overall availability rate dropped to a low point of 3.5 percent, compared to 5.5 percent just two short years ago. The dramatic decline in the overall availability rate is the result of over 14 million square feet being absorbed during this time period due to strong leasing activity from rapidly growing warehousers and logistics firms, as well as requirements from flex/high-tech users. In an attempt to satisfy the craving for more industrial space, Grubb & Ellis states that developers have heeded this call with a combination of speculative and build-to-suit construction projects.

Grubb & Ellis reports that the average asking rental rate for standard industrial space in Northern and Central New Jersey has fluctuated just below $5 per square foot for the last two years, despite the rapidly falling availability rate. Technology intensive firms, working. in the telecommunications, pharmaceutical, biotechnology and software fields have become neighbors to the traditional manufacturing, assembly and warehouse/logistics companies responsible for growing the state's industrial market n the last century. Grubb & Ellis states hat New Jersey is experiencing an evolving market comprised of a growing spectrum of assorted users that will populate the future industrial market landscape.

Along the Hudson Waterfront and in the Essex East/Newark CBD submarket, the Class A availability rate is less than 1 percent, meaning virtually complete occupancy. As a result, tenants with Class A space requirements must look at nearby alternative

submarkets, such as the Bergen North, Central and East markets or the Meadowlands. In these submarkets, the collective Class A availability rate has dropped to 12.5 percent, compared to 135 percent a year ago. This trend is being repeated throughout the State, as tenants seeking large blocks of Class A space are discovering that such space may not be available in their intended target area.

Halfway into the year 2000, and it appears that little has changed in the state's retail market since 1999. Consumer confidence has been at an unprecedented high level, both nationally and locally, which has been the catalyst driving consumer spending behavior in early 2000. New construction, combined with ongoing bankruptcies, have resulted in opportunities for retailers seeking to grow their store base in the coveted New York Metropolitan area.

The battle for consumers between brick and mortar retailers and the click and order online retailers continues to evolve, according to Grubb & Ellis. Internet shopping, still in its infancy, is a small part of overall retail sales. According to retail sales data from the U.S. Census Bureau, Internet retail sales accounted for 0.7 percent of total sales in early 2000, which were estimated at nearly $748 billion. This represented a slight increase from the end of 1999.

Space shuffling caused by a wave of recent bankruptcies has allowed the entrance of new faces into the state's retail market. Following a media blitz introducing itself to the New York metropolitan region's consumers, Kohl's opened thirty-two stores in this market. Many of these stores were opened at former Caldor locations.

"It's continued to be good news to New Jersey during the first half of 2000, stated Richard Marchisio, Senior Vice President/Managing Director of Grubb & Ellis' New Jersey operations. "By all indications, both the real estate and economic climate of the state remains very upbeat. The impact of these positive factors has put tremendous pressure on tenants and investors looking for space in this market. At Grubb & Ellis, we have been enjoying a record year due in large part to our company's ability to analyze market trends and strategically advise our clients accordingly," Marchisio concluded.

Grubb & Ellis Company is one of the nation's largest commercial real estate services firms. Through its offices, affiliates and global strategic alliance with Knight Frank, one of the leading property consulting firms in Europe and Asia, the company provides a full range of real estate services, including, advisory, management and consultative services, to users and investors worldwide. With the collective resources of nearly 7,000 people in 200 offices in 27 countries, Grubb & Ellis professionals arrange the sale or lease of such business properties as industrial, retail and office buildings, as well as the acquisition and disposition of multi-family and hospitality properties and commercial land.

To receive a complimentary copy of the Grubb & Ellis Market Trends, or for more information on Grubb & Ellis Company contact the firm's Fairfield, New Jersey offices at 973-486-2500 or visit the company's website at www.grubbellis.com.