Jersey industrial leasing numbers mixed.

Cushman & Wakefield's mid-year 2006 office and industrial leasing research statistics paint a mixed picture for the office market, with vacancy rates holding steady but leasing activity on a slower pace from this time last year.

Industrial activity, on the other hand, is significantly ahead of levels reported at mid-year 2005.

Within Northern New Jersey, overall vacancy rates crept up modestly during the past three months, from 17.9% to 18.4%, while overall asking rental rates rose 38 cents psf to end the quarter at $26.42. In Central New Jersey, improving market fundamentals resulted in a slight decline in overall vacancy rates, from 19.3% to 19.2%, while rental rates held relatively steady, at an average of $24.06 psf.

"Tenants have leased 2.9 million s/f in Northern New Jersey since the beginning of the year, which is 10% below totals reported at this mid-year 2005," said Gualberto "Gil" Medina, executive managing director and head of Cushman & Wakefield's New Jersey offices. "Yet despite the slowdown, a renewed demand for office space in Jersey City has resurfaced from financial firms migrating across the Hudson River from Manhattan." For example, at Harborside Financial Center X, Citco Fund Services leased 69,562 s/f and will move up to 300 employees into the state by 2007. Northern Trust took another 35,000 s/f at the building.

In Newark, Morgan Stanley sublet 87,000 s/f from Verio Inc. Notable regional renewals were locked in by NBA (199,000 s/f) Polo Ralph Lauren (157,000 s/I) and Agfa-Gevaert Group (88,147 square feet).

"In Central New Jersey, where 2.2 million s/f of leases have been executed, totals also lag behind last year, when totals had reached nearly 2.4 s/f," Medina said. "Bright spots include the red-hot Princeton area, where several significant transactions have closed."

This includes RadPharm's expanding from Carnegie Center and taking 43,500 s/f at 100 Overlook Drive and Washington Group International renewing for 234,000 s/f at 510 Carnegie Center. Elsewhere, in Trenton, Wachovia Corporation opened its 40,000-s/f regional headquarters. Continuing the resurgence of new construction that began last year, developers have remained active during the first half of 2006. In Morris County, a 175,000-s/f speculative building on Kimball Drive in Parsippany is nearing completion. In Whippany, development commenced on a 76,383-s/f facility for CAE, a designer/manufacturer of civil flight simulators.

In Bergen County, the 74,000-s/f 1 Riverfront Center in Elmwood Park, partially pre-leased by Sealed Air Corporation (33,835 s/f) is finished. Additionally, the long-vacant "skeleton building" in Fort Lee was completed as the new corporate headquarters for CareOne. In Woodcliff Lake, a 209,000-s/f office building is progressing for pharmaceutical firm Eisai Inc. and is expected to be completed by 2007.

In Central New Jersey's Lawrence Township, ground was broken on speculative buildings at the Cranbury Executive Center (100,000 s/f) and at 1100 Lenox Drive (75,000 s/f). In May, a joint venture between Mack-Cali and the PRC Group started a 92,878-s/f, build-to-suit office building for Hovnanian Enterprises, Inc. in Red Bank.

Within the Princeton region, 453,000 s/f feet of fully vacant speculative facilities are under construction by Reckson Associates and Boston Properties, while a 120,000-s/ f, build-to-suit operations center for AAA Mid-Atlantic is nearing completion. In January, the Patrinely Group completed the first, 167,000-s/f building within its new Princeton Corporate Campus.