Retail market helps New Jersey balance its act.

Grubb & Ellis Company announced the release of its Second Quarter 2005 Northern and Central New Jersey Office and Industrial Market Trends.

In addition, the company released its annual Mid Year 2005 Retail Market Trends.

Office Market Trends showed that the Northern and Central New Jersey overall office availability rate ticked upward to approximately 20.4 percent, compared to 20 percent in early 2005.

Just over 14,000 square feet of negative net absorption occurred in the office market and, with more than 360,600 square feet of negative net absorption, the Hudson Waterfront recorded the largest volume of negative absorption in Northern and Central New Jersey.

After remaining near the 8 percent level since year-end 2003, the overall industrial availability rate increased to nearly 9 percent in the wake of corporate consolidations.

Pockets of growth, rather than widespread leasing velocity spanning multiple submarkets, continue to define the current industrial market cycle.

More than 4 million square feet of negative net absorption occurred in the Central New Jersey industrial market, while Northern New Jersey posted 697,000 square feet of positive absorption.

Strong consumer spending levels have been the leading force behind retail expansions in New Jersey, according to Grubb and Ellis which found that the competitive retail market has triggered a wave of merger and consolidation announcements.

The redevelopment of former industrial sites to retail uses are likely to remain a viable alternative, especially in markets where large tracts of available land are in short supply, according to the firm.

"While positive leasing momentum led to nearly 420,000 s/f being absorbed in the Central New Jersey office market, the nearly 434,000 s/f of negative absorption that occurred in Northern New Jersey offset these gains," said Stephen Jenco, Client Services Manager of Grubb & Ellis' New Jersey offices.

"A large portion of the negative net absorption witnessed in the Northern New Jersey market can be attributed to consolidations that took place in Hudson Waterfront during the second quarter."

Regarding the industrial market, Jenco stated, "While the forces of supply and demand have essentially canceled one another during the past several quarters, this delicate balancing act came to an end in mid 2005, as additional available space overwhelmed the market and caused the Northern and Central New Jersey industrial availability rate to near 9 percent."

He added that despite the higher overall availability rate, several markets did record positive absorption. "Pockets of growth, scattered throughout Northern and Central New Jersey, are anticipated to pro vide the storyline for the industrial market through the second half of the year," he concluded.

On the retail market, Jenco stated, "Despite rising energy costs, consumers continue to show a willingness to open their wallets and pocketbooks, which has promoted retail expenditures." The retail market is expected to remain on solid footing as retailers pursue additional locations in an effort to tap the Garden State's strong demographics.