CUSHMAN & WAKEFIELD REPORTS POSITIVE NEWS FOR N.J. REAL ESTATE
Marked Increase in Office, Industrial Leasing Provides Evidence of Recovery
EAST RUTHERFORD, N.J. – July 21, 2011 – (RealEstateRama) — Evidence of recovery has spread throughout New Jersey’s office and industrial real estate markets at mid-year 2011, according to Cushman & Wakefield, Inc. in East Rutherford.
The commercial real estate services firm’s second quarter research findings show office leasing totals in Northern and Central New Jersey at 4.1 and 14.9 percent higher than mid-year 2010. Additionally, a notable jump in industrial leasing has set numbers on course to outperform both 2009 and 2010 totals, with a 74.0 percent year-over-year increase.
OFFICE OVERVIEW
Year-to-date Northern New Jersey office leasing activity totaled 2.6 square feet at the end of June, while the central counties saw 1.56 million square feet in completed transactions. Top second quarter deals included Evonik DeGussa Corporations’s 150,500-square-foot lease at 299 Jefferson Road in Parsippany. Lifecell Corporation committed to 117,937 square feet at 95 Corporate Drive in Bridgewater, while Celgene signed a full-building lease for 104,323 square feet at 33 Technology Drive in Warren Township.
Despite the increase in leasing, Northern New Jersey’s overall vacancy rate, at 17.3 percent, is 0.6 percentage points higher than at mid-year 2010. Several large blocks of space being added to the market over the past year have contributed to this trend. The overall asking rental rate, currently registering $25.53, remained flat for the quarter.
At the same time, the Class A vacancy rate, at 18.7 percent, is down 1.5 percentage points from its peak in September 2010. “This decrease can be attributed to strong leasing in premier markets, notably the Hudson Waterfront,” said Gualberto “Gil” Medina, Cushman & Wakefield’s executive managing director in New Jersey. “As a result, Class A overall asking rental rates, at $27.75 per square foot, saw an 8.3 percent, or $2.13 per square foot, increase over the last three months. This is the largest quarterly increase in the Northern New Jersey market since before 2006.”
In Central New Jersey, the overall vacancy rate, at 20.4 percent, is down 1.4 percentage points from mid-year 2010. “The former Lucent Technologies site in Holmdel, with 1.9 million square feet of availability, contributes greatly to this still relatively high rate,” Medina said. “If it was excluded from the statistics, the overall vacancy rate in Central New Jersey would be 17.9 percent, which is more reflective of current fundamentals.”
The central counties’ overall asking rental rate, at $22.86 per square foot, has been flat over the past year. However, pockets of high-priced office space exist in the region, namely the Princeton market, where the Class A asking rental rate was $35.63 per square foot at mid-year 2011.
“Job growth in office-using industries is slow but is increasing monthly,” Medina said. “This expansion is sparking further real estate demand. Tenants looking for office space will continue to be motivated by lower rental rates, and leasing activity should remain strong.”
INDUSTRIAL RECAP
Some 11.1 million square feet of new industrial leasing was recorded during the first half of 2011, including 12 transactions over 100,000 square feet during the second quarter. The largest involved Wakefern Food Corporation’s 1.0 million-square-foot commitment at 8001 Industrial Ave. in Carteret. Additionally, Kenco Logistics, LLC signed on for 504,286 square feet at 100 West Manor Way in Robbinsville, while Hankook Tire America Corp. took 411,000 square feet at 18 Thatcher Road in South Brunswick.
Additionally, 2.5 million square feet in overall net absorption reflects significant improvement, as compared to negative 4.8 million square feet at mid-year 2010. As a result, the vacancy rate has dropped to 10.0 percent, from 11.1 percent 12 months ago. Average asking rents held steady through the second quarter at $5.62 per square foot.
“This improvement, despite continued slow employment growth, suggests that companies are recovering but with lean operations,” Medina said. “We expect industrial leasing velocity to stay robust; while it varies between each submarket, the opportunity for tenants to take advantage of lower rents is waning.”
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