Office fundamentals put Jersey on course for growth.

The Northern/Central New Jersey office market was characterized by equilibrium in the fourth quarter, according to the findings of CB Richard Ellis' 4th Quarter 2006 Office Marketview.

The market closed out the fourth quarter of 2006 with a slight decrease in leasing activity, negative net absorption, and increases in the availability rate and asking rental rates. These seemingly contradictory market indicators suggest that the current negative trend is short-term and that the long-term outlook for New Jersey remains strong.

According to CB Richard Ellis, the longterm picture shows positive net absorption (744,000 s/f) for the second year in a row, 7.91 million square feet of leasing activity, and an increase of $0.80 in average asking rents compared to last year at this time.

The most notable and positive trend for fourth quarter of 2006 was that some of those long, lingering deals that had been in the market for a year and a half or longer finally came to a close, bringing the year-end office market closer to equilibrium.

"It is our belief that New Jersey remains superbly positioned to lead the Northeast in economic expansion, job growth and real estate fundamentals. We view New Jersey's diversified corporate base, superb location, value proposition near New York City and skilled labor force as continued drivers in New Jersey's excellent long-term growth prospects," stated Raymond Sohmer, senior managing director of CB Richard Ellis.

Highlights from the CB Richard Ellis office report include:

* The availability rate in the Northern/Central New Jersey office market increased slightly from last quarter, coming in at 18.2%. Available space as of the fourth quarter 2006 totaled 28.67 million square feet, a slight increase from last quarter's 28.24 million square feet and a minor increase from fourth quarter 2005's 28.56 million square feet.

Submarkets with the lowest availability rates over the fourth quarter 2006 include: Route 17 Corridor (5.6%), Orange/Rockland Counties (7%), Western Route 78 (9%), and Chatham/Millburn/Short Hills (9.1%).

* Average asking rents increased slightly during the fourth quarter (up $0.04), totaling $25.43 per square foot, but showed an impressive $0.80 boost in comparison to fourth quarter 2005's $24.63 per square foot rate. Those submarkets posting the highest average asking rents as of the fourth quarter 2006 are Chatham/Millburn/Short Hills ($37.90 psf), the Hudson Waterfront ($30.02 psf) and Montvale/Woodcliff Lake ($28.94 psf.)

* The Northern/Central New Jersey office market rolled into the fourth quarter on the coattails of positive absorption but closed out the quarter with negative 430,000 s/f of net absorption. Yet net absorption remained positive for the second year in a row, totaling 744,000 s/f at year-end. Those submarkets experiencing the most positive absorption during the fourth quarter of 2006 include Parsippany (480,000 s/f), Urban Essex (380,000 s/f), and the Waterfront (300,000 s/f).