Good times lie ahead in NJ.
In the Central New Jersey office market, as defined by Somerset, Middlesex, Mercer and Hunterdon counties, the demand among financial, telecommunications and high technology firms will enjoy a strong market in 2000. However, the Somerset/I-78 submarket will continue to struggle, as large blocks of new space will add to the overall Class A vacancy of 30 percent.
In contrast, the steady, consistent leasing activity in the Metropark/GSP submarket has caused the Class A availability to drop below 3 percent. In the Princeton market, we expect a focus on build-to-suit projects and spec development to emerge. In the industrial market, Middlesex County is expected to remain the hotbed of industrial and flex activity, as consistent leasing activity shows no sign of subsiding.
A new market is expected to spring up at Exit 6 when the new, full interchange is completed. Additionally, the standards for warehouse construction in the future will continue to be ceiling heights greater than 30 feet, with technologically advanced sprinkler systems and cross-loading docks. Driving the industrial market in the new year will be the pharmaceutical market in New Jersey, which ranks first in the nation for research and development.
The availability rate for flex space will continue a steady decline, with much of the available space not meeting today's users' requirements. As a result, developers will continue to come forward to satisfy the appetite for modern, multi-purpose facilities. The trend of converting obsolete manufacturing buildings into switching stations will also be a significant trend. Burlington and Gloucester counties will continue to experience very strong leasing and development activity, with absorption rates remaining strong throughout 2000.
In the retail sector, the landscape will continue to be strong, with the state's unemployment rate below 5 percent and consumer demand strong. Competition among category-killers and national powerhouses will absorb most of the space being vacated by less strong retailers. Loews, Home Depot, Sears and supermarkets will lead the way.
With the absence of REITs on the investment market, local investors, off-shore funds and pension funds have capitalized on the void. The majority of the activity will continue to be focused on the lower priced Class B and C properties.
Redevelopment opportunities in Newark also continue to see a great deal of action. Additionally, the trend of acquiring neglected properties leased to multiple tenants in prime locations will prove to be a major trend in the market.
All in all, the market looks great for the new year and foreseeable future.
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|Author:||Romano, Joseph R.|
|Publication:||Real Estate Weekly|
|Article Type:||Brief Article|
|Date:||Jan 26, 2000|
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