Printer Friendly

NJ attractive option despite NY competition.

In addition to falling rental rates and increases in landlord concessions to tenants, New Jersey offers commercial and industrial firms something they can't get in the "Big Apple" across the river, namely, an attractive life-style with intangible values along with low rental rates plus big concessions.

New York is becoming more competitive with the New Jersey market because of its own problems, cutting the gap between rental rates between there and here.

As an example, many office rentals in Manhattan's Grand Central and financial district buildings now are in the low $20s per square foot as compared to $17 to $20 in northern New Jersey.

Landlords are combating the stepped-up New York, as well as intrastate competition, by offering liberal rent concessions and sophisticated work-letters. Space in second and third generation office buildings can be had for as little as $10 to $12 per square foot, with first class space priced in the higher teens.

Those developers who are seizing the opportunity by upgrading less than prime buildings with new facades and interiors will be successful in luring tenants.

As an example, Colonial Village, a five-building, mixed-use development on Route 27 and Parsonage Road in Edison, is successfully attracting small tenants by remodeling interiors, adding new parking areas, signage and land-scaping.

Because of the soft commercial/industrial market, real estate owners are offering tenants and prospective buyers more options. In 1992, we can expect the trend toward more bankruptcies, foreclosures and ORE's, Bank Owned Real Estate to continue. In an attempt to forestall these events, many developers are now trying to salvage their real estate holdings by selling equity and bringing in joint venture partners.

In addition to the usual concessions, one owner, The Pivko Group headed by Fredrick Schulman who, in marketing their 270,000 square feet of central business district office space at 50 South Clinton Street and 30 Evergreen Place in East Orange, is offering tenants the opportunity for equity positions with highly favorable purchase money financing. Their reasons are quite simple. Lenders have basically closed their doors and are taking a "wait and see" attitude regarding real estate, owners like Pivko must be prepared to fill that role permanent lender.

Because of lower New York costs and because of the continued high vacancy rate in New Jersey, it is essential for real estate owners to offer tenants and prospective buyers, more options.

In spite of the pessimistic forecast, there are a number of areas throughout the Garden State that appear to have promising potential for future development and growth in the 90's. To be sure, adaptability still counts but the watchword for real estate success in the '90s may well be "survival of the most innovative".
COPYRIGHT 1992 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:New Jersey; New York; option for commercial and industrial firms
Author:Weiss, Jaime M.
Publication:Real Estate Weekly
Date:Oct 21, 1992
Previous Article:Blue Hill Plaza: 90's success story.
Next Article:Century 21 Otto expands.

Related Articles
ESG/NJ places insurer.
Fairfield experiences a relocation revival.
Sheldon Good to auction 230 tri-state properties.
Rockland County is poised to thrive.
Kessel receives approvals for Sussex spec buildings.
Gerber/Somma Associates.
Tenants exploring suburban leasing alternatives.
Insignia/ESG New Jersey Industrial Services Group: Industrial sector on the move. (Profile of The Week).
Partners announce $110m Gold Coast project.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters