Mixed messages in office market as waterfront bucks slowdown.

GVA Williams New Jersey has released its first quarter market report, which provides an extensive analysis of the office real estate marketplace in New Jersey.

According to GVA Williams New Jersey's research, the state is experiencing mixed office market conditions in both northern and central New Jersey.

While areas such as the Hudson Waterfront and Princeton submarkets are experiencing increased activity, demand in other suburban markets has not been as substantial.

The financial and pharmaceutical industries have long been drivers in the office market in New Jersey.

According to GVA Williams, the continued growth of the financial markets has benefited the Hudson Waterfront, however, mergers and acquisitions in the pharmaceutical sector have hindered activity in suburban markets.

GVA Williams noted that the first quarter showed leasing activity, particularly in the small business sector in Princeton, while the market's heavy speculative office construction reflects the demand for high-quality Class A office space in the region.

GVA Williams states that this speculative trend is a good sign for the future of New Jersey's economy, as these new properties will compete with each other to attract corporations to the area, perhaps as possible headquarters locations.

Additional highlights in New Jersey's office real estate marketplace during the first quarter of 2007 include: In the first quarter of 2007, office leasing in the Newark market has been soft and asking rents have remained unchanged, however there has been a recent increase in demand.

Newark currently has a less than five percent vacancy around Penn Station, which reflects the importance of public transportation to tenants in this marketplace;

The overall office vacancy rate at the end of the first quarter was 17.95 percent, which was a slight increase from 17.93 percent at the same time last year, and 17.58 percent at the end of the fourth quarter 2006. Northern New Jersey's vacancy rate was 16.85 percent, which was an increase from 16.61 percent at the same time last year, and 16.77 percent at the end of the fourth quarter 2006. Central New Jersey's vacancy rate was 19.58 percent, a decrease from 19.83 percent this time last year and a substantial increase from 18.77 percent from the fourth quarter 2006;

Statewide average asking rents are $24.30 per square foot gross, plus tenant electric, an increase from $24.25 in the first quarter 2006 and $23.95 at year-end 2006. Rents increased in the northern part of the state to $24.52 from $24.41 in the fourth quarter 2006 and decreased from $24.61 this time last year.

Central New Jersey rents increased to $23.98 from $23.36 in the fourth quarter of 2006.