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New office deliveries highlight NJ market.

New office deliveries highlight NJ market

Over 1.3 million square feet of new office space was delivered in the Northern New Jersey office market during the third quarter of 1991. Despite the dramatic drop-off in new construction over the last six quarters, five buildings were completed and brought on line, carrying with them a vacancy rate of 93.1 percent This high vacancy rate is primarily attributed to the completion of the 864,533-square-foot Newport Office Tower in Jersey City which remains 100 percent vacant. The completion of this substantial project offsets an otherwise high absorption experienced at the Hudson County Waterfront during the first half of the year.

This major addition of Class-A space will offer new opportunities for prospective tenants and should contribute to the continued brisk leasing activity. Also, the Hudson County Waterfront will receive additional attention because of the recent opening of the Waterfront Connection. The Waterfront Connection is New Jersey's first new commuter rail link since 1967 and is one of several extensions planned throughout the state. This link will further enhance direct rail access between Newark and Hoboken.

In another part of the state, there has been no new construction starts in the Princeton market as financing has been difficult, even in the case where there is preleasing. This fact has contributed to the continued shortage of available Class-A space. Of significance to the Princeton real estate community is the news that Landis Associates, owner of the 500-Acre Carnegie Center, recently took on a new financial partner, Taylor Simpson. This coalescence of strengths has made the continued expansion of this significant office park more viable than ever before.

Across all of Northern New Jersey, leasing activity was limited over the third quarter. One substantial lease was for the $30 million computer communication firm, Datability, which relocated from Manhattan to One Palmer Terrace in Carlstadt, leasing 45,000 square feet. Another significant transaction was at Glenpointe Centre West in Teaneck where Mutual of New York re-leased 98,232 square feet for five years.

In spite of these major transactions, a variety of industries continued to suffer from a decline in sales and, as a result, many New Jersey businesses have failed. In addition, numerous commercial and industrial projects have failed as many landlords have been unable to remain solvent. Accordingly, these owners have been faced with various restructuring plans while others have foreclosed, putting the property back in the hands of the financial lender. This situation, however, is not unique to New Jersey as other areas in the Northeast are also experiencing similar circumstances. Meanwhile, many savings institutions have also been determined to be insolvent. In such instances, The Resolution Trust Corporation has assumed control over the property and is now responsible for its sale.

Two positive trends which have occurred recently in New Jersey are the state's Economic Development Authority's help in relieving credit troubles by providing low interest loans to businesses that are unable to secure traditional financing. Furthermore, the Department of Commerce and Development boasts a remarkable number of businesses that, throughout the year, have reported plans to relocate or expand in New Jersey.

While leasing activity usually strengthens during the final quarter of each year, Cushman & Wakefield's early fourth quarter analysis point to a strong final quarter as many company announcements to expand or relocate on a prelease or built-to-suit basis are expected. For quite a while, many companies have placed certain business decisions on hold. However, at this critical time, the Northern New Jersey commercial market is believed to have reached its turning point as tenants realize that now is the time to achieve the best possible lease terms.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Review & Forecast Section IV
Author:Eisen, Donald P.
Publication:Real Estate Weekly
Date:Jan 29, 1992
Words:610
Previous Article:Strong to survive in NJ.
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