The Hudson waterfront is alive and well, or is it?

The good news is that the glut of sublease space that has been a drag on the office market for several years is slowly being absorbed.

Helping the process along was the backfilling of 541,740 s/f by UBS Painewebber and 332,883 s/f by JP Morgan Chase. Still to be reckoned with are seven sublet units of 50,000 s/for larger that continue to look for subtenants, four of which are greater than 100,000 s/f. Worrisome? You bet.

Location, location, location is always the best barometer for real estate to be successful. If you live in New Jersey, unless you happen to reside in one of the many thousands of apartments that line up along the river and its nearby environs, the

Hudson Waterfront is not necessarily a great location for you to work.

Fighting the traffic that makes its way to the Lincoln and Holland Tunnels does not make for an inviting and relaxing commute by auto in the morning. Yet ironically, the Hudson Waterfront is an excellent location if you live in four of the five boroughs that make up New York City. Because of the PATH rail that operates between the Hudson Waterfront, midtown Manhattan and Lower Manhattan, the Hudson Waterfront is referred to by the workers who travel there daily as the "sixth borough of New York".

Every day a stream of commuting workers from the Bronx, Brooklyn, Queens and Manhattan can be seen exiting the PATH on the way to work. Here they are welcomed by an environment that mirrors what they are used to in New York City. The restaurants, shops and high-rise office buildings give one the feeling they remain connected to the "pulse" across the river.

Do you miss the subway? No need to fret. The Hudson Waterfront continues to extend the Light Rail system that will eventually reach as far north as Tenafly with connections to Jersey City and all points in between.

As for now, enough of the system has been constructed to make this a reliable, stress-free method to travel along the waterfront.

Why would a happily ensconced Manhattan office tenant choose to relocate to the Hudson Waterfront? To some this is an easier decision than you might imagine.

Almost all high-rise office buildings on the Hudson Waterfront are less than 25 years old. This means that these buildings were constructed for the technology-oriented tenant. The typical slab-to-slab heights, oversized electric/data conduits, computer wiring, back-up capability, etc., are very appealing to today's tenant.

When you add practically column-free environments, you can see why so many of the Wall Street elite financial houses have chosen to locate substantial back office operations on the Hudson Waterfront.

What about the financial side of this equation? Here again, the Hudson Waterfront is a hands down winner. Loss factors, the cost of tenant electric, and rental rates are all roughly 1/3 less than they average in Manhattan. As rents in Manhattan continue to percolate to never before seen levels (in some trophy buildings rents are topping $100 per square foot), who knows what to expect. All of these factors may create a spectacular time for landlords on the Hudson Waterfront.

How much time this will take to evolve will depend on many factors, including, but not limited to interest rates, the health of the national economy and the financial markets, oil prices, and not least of all, what Trenton will do about the New Jersey budget deficit.

Many tenants' decisions to come to or remain in New Jersey have been based in some part on the BEIP (Business Employment Incentive Program). If the Governor chooses to ignore the benefits of a program like the BEIP and reduces or eliminates it and others like it, then no matter how attractive the Hudson Waterfront may be, it will be in for a rough time.

BY FRANK GUNSBERG, EXECUTIVE VICE PRESIDENT

GVA WILLIAMS NEW JERSEY