GVA Williams releases New Jersey report.
According to GVA Williams' research, the New Jersey marketplace in the first quarter of 2002 experienced the following major trends:
* At the conclusion of the 1st quarter, the New Jersey commercial real estate market continues to be soft, with supply, created by corporate mergers, consolidations, and downsizing, outpacing demand. The market is witnessing negative net absorption for the 3rd consecutive quarter. This is mostly attributable to excess sublease space, totaling approximately 1.1 million SF, placed on the market by corporations looking to dispose of excess office space. Despite an initial burst in leasing activity due to displacements from Manhattan in the fourth quarter of 2001, New Jersey has not been the recipient of the mass exodus that many had predicted in the days following the events of Sept. 11. However, the bifurcation of technical operations for financial services firms, such as data recovery sites, is expected to continue. The market effect would be even less prevalent if several large transactions completed on the Hudson Waterfront, really an extension of the Manhattan market due to infrastructure connections, were removed from the equation.
* At the end of the 1st quarter, New Jersey recorded a vacancy rate of 18.5% up 15% from the 15.8% recorded at the end of 2002. Despite the large increase in vacancy, average asking rents have remained constant due to the fact that 32% of overall vacancy in the state is sublease space, in which tenants are still paying rent. However, landlords have become more flexible and receptive to creative deal making due to the recessionary environment and the reality that a large percentage of the sublease space (approximately 2.3 million SF) will return to owners between now and the end of 2003 if not absorbed by an improving economy. Locations within premier submarkets with good highway access and mass transit options continue to command a premium. In addition, the commercial real estate market has been cushioned during this recession due to the life sciences industries, (pharmaceutical and biotech), which continue to expand their presence in New Jersey despite the current state of the economy.
According to Jeffrey M. Schotz, executive managing officer, GVA Williams, "Our market analysis reflects the current dichotomy of the New Jersey commercial real estate marketplace. While vacancies have risen due in large part to the amount of sublease space on the market, rental rates have remained steady. Additionally, while landlords are in a much stronger position than in previous downturns, the market has returned to a more balanced landlord and tenant climate. We fully expect tenants will begin to move aggressively and take advantage of these favorable conditions which should lead to a full recovery by years end," Schotz concluded.
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|Publication:||Real Estate Weekly|
|Article Type:||Statistical Data Included|
|Date:||Jul 10, 2002|
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