Mack takes over reins at Harborside Center.

Mack-Cali has taken over leasing responsibilities for Harborside Financial Center, a 3.6 million s/f cluster of office properties that the company owns on the Jersey City waterfront. CB Richard Ellis had previously handled the leasing assignment for the complex, but Mack-Cali's president and CEO, Mitchell Hersh, indicated that the decision had been made to switch to an in-house leasing team because vacancy in Harborside's six buildings had fallen to such a low level.

"CB Richard Ellis did an incredible job, we're basically 100% leased," Hersh said.

The shortage of space at Harborside is reflective of the increased level of activity the Jersey City office market is enjoying as rents in Manhattan continue to rise. In midtown, just finding available space has become a challenge for most tennants and rents are on the verge of rising to new highs as a record volume of deals are being signed for rents above $100 per s/f, the low end of what is considered the highest pricing bracket for space in the city.

Downtown's place as a low cost alternative has been challenged by the degree of midtown overflow that has flooded into Jersey as the gulf between its rents and those in midtown widened in recent months to near record levels. While it is still significant, that gap is now beginning to close, however, as space, especially in the district's class A office buildings, has begun to rise due to the level of increased leasing activity. While rents for its best office stock are still half of what commensurate space would cost in midtown, downtown hasn't been the kind of wallet-saving solution that some tenants have sought in Jersey City, where offices can be had for rents in the $20s per s/f.

This migration, modest but palpable according to Hersh, may give way to a long planned expansion of Harborside. Hersh said that the company could build up to three new office buildings, to be called Plaza 4, 6, and 7, that would expand the complex a block eastward and nearly double its present size.

But as is the case with most developers who are pondering major new buildings in the city or its surrounding office markets, Hersh is waiting on anchor tenants, a group composed predominantly of financial firms who could use the massive floorplates that Mack-Cali can develop to house trading or for back office functions.

Hersh indicated that the cost of midtown had caused more firms to examine how much of their workforce needs to be in the city and more actively consider exporting offices whose location is not critical to less expensive markets like Jersey City--a trend that could speed the time frame for Harborside's expansion.

"You're seeing more and more tenants bifurcating their operations, keeping the front office operations in midtown but lessening their presence in expensive districts by moving their back offices to markets like Jersey City which are much more cost effective," Hersh said.