Report: vacancies will continue to rise in 2002. (New Jersey).
Following are some of the most significant aspects of the report:
* Office completions will decline in 2002, but the 5.6 million SF coming online will be difficult for the market to absorb. Construction activity will slow over the next 12 months, ending the building boom that began in 1998. Office starts will total 5 million SF in 2002, still a relatively high number, but a decline of 1 million SF from 2001 levels. Completions will total 5.6 million SF in 2002, down approximately 500,000 SF from a year ago.
* Average vacancy will jump by 1.6 percentage points, continuing a trend that began last year. Vacancy rates will continue to rise throughout Northern and Central New Jersey in 2002, as an abundance of new office projects come online amidst a poor employment market. The forecast is for an increase in vacancy to 14% throughout the region, a gain of 1.6 percentage points.
Average vacancies rounded out 2001 at 13.6%, not including sublease space. In Central New Jersey, average office vacancy will rise to nearly 13% in 2002 after ending 2001 at 11.2%.
* Owners were able to push rents slightly higher on average last year, but the vacancy surge will lead to a softening rental market in 2002.
* Owners were able to raise rents last year an average of 1% despite rising vacancy rates, but they will find it difficult to do so in 2002. Job growth, which is forecast to be minimal, will depress demand for office space, leading to low absorption levels. Average asking rents in New Jersey will fall by 1% this year, to $23.61 per SF, full service.
* Sales velocity will slow in 2002 as tight lending requirements for office buildings combine with a widening gap between buyers' and sellers' expectations. Sales prices will remain flat in 2002 as the instability in the local office market continues over the next 12 months.
For a copy of the complete Northern and Central New Jersey Office Market Report, as well as reports on 27 other markets nationwide, access our website at www.marcusmillichap.com.
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|Publication:||Real Estate Weekly|
|Article Type:||Brief Article|
|Date:||May 8, 2002|
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