N.J.’S ECONOMIC RECOVERY RESONATES IN REAL ESTATE MARKETS
Cushman & Wakefield’s 1Q11 Research Findings Show Improving Fundamentals
EAST RUTHERFORD, N.J. – April 27, 2011 – (RealEstateRama) — Job growth in office-using industries and increased port container volume are among several emerging indicators of New Jersey’s economic recovery. And Cushman & Wakefield, Inc.’s first quarter 2011 research findings reflect the positive results resonating in the commercial real estate industry.
“The office markets in both Northern and Central New Jersey saw improved market fundamentals during the first quarter of 2011, and the industrial sector experienced a huge leap in leasing volume,” noted Gualberto “Gil” Medina, the commercial real estate firm’s New Jersey executive managing director. “Renewed confidence can be felt throughout the real estate market.”
OFFICE OVERVIEW
Year to date, tenants leased more than 1.3 million square feet of office space in Northern New Jersey, a total 11.0 percent higher than in the first quarter of 2010. Central New Jersey’s 550,484 square feet of office lease transactions represented a total nearly 20 percent higher than last year at this time.
“The Hudson Waterfront market continues to lead leasing in Northern New Jersey, accounting for 34.4 percent of year-to-date 2011 activity,” Medina noted. “In the Central counties, more than half of the leasing took place in Middlesex and Somerset counties.”
Among the most significant new lease transactions, Fidelity Real Estate Company leased 185,440 square feet at Newport Office Center III in Jersey City, and Jefferies & Company expanded its presence in Jersey City, with a 62,763-square-foot lease at 101 Hudson Street. Further south, in Berkeley Heights, Celgene leased 77,566 square feet at Connell Corporate Center III.
“The largest increase in job growth in New Jersey occurred in the professional and business services sector, where 3,300 new jobs were added in February alone,” Medina said. “If this trajectory continues, New Jersey’s office markets are primed to see even healthier leasing activity in the coming months. However, we still are looking at a glut of space in the region. This needs to be absorbed before vacancy rates and rents will show marked improvements.”
However, the overall vacancy rate in Northern New Jersey did decrease by 0.2 percentage point from year end 2010, to 17.1 percent. The Central New Jersey overall vacancy rate, at 21.2 percent, remained flat.
Both Northern and Central New Jersey’s overall asking rents, at $25.62 per square foot and $23.06 per square foot, respectively, declined slightly from year-end 2010. Northern New Jersey experienced a $0.13 per-square-foot drop; Central New Jersey saw a $0.04 per-square-foot drop. On a more positive note, the rate at which rents are declining has slowed considerably, according to Medina.
“As 2011 progresses, we expect to see rentals stabilize further,” he said. “In the meantime, tenants motivated by these lower rates and market opportunities will continue to drive leasing activity,” he said. “As all market fundamentals strengthen, the real estate market is poised to turn the corner into full recovery.”
INDUSTRIAL RECAP
In an impressive 62.6 percent year-over-year increase, industrial leasing topped 4.7 million square feet during the first quarter of 2011. This included a significant uptick in big-box leasing activity, with several notable transactions returning New Jersey to a positive absorption status.
I/O Data Center’s 831,427-square-foot commitment at 3003 Woodbridge Ave. in Edison led the charge. Additionally, Adjco Warehouse and Logistics leased 418,300 square feet at 113 Interstate Blvd. in South Brunswick. Medical Depot, Inc. committed to 160,042 square feet at 200 Docks Corner Road in South Brunswick. And Vintage Foods took 122,000 square feet at 849 Newark Turnpike in Kearny.
Statewide, the industrial vacancy rate has fallen consistently during the past six months and now lies at 10.5 percent. And while average asking rents have declined slightly, by $0.16 per square foot to $5.63 per square foot, rates likely will stabilize as absorption continues.
“Add to this mix a report from The Port of New York and New Jersey announcing a 16.0 percent annual increase in container volume, for a total of 5,292,020 TEUs, and the industrial market’s momentum is likely to grow,” Medina said. “Employment opportunity, trade volume and fuel volatility will continue to be driving factors behind demand for industrial space in densely populated, highly accessible New Jersey.”
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Evelyn Weiss Francisco
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