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TMCNet:  North Jersey's office market shows resilience in 3rd quarter

[October 03, 2008]

North Jersey's office market shows resilience in 3rd quarter

(Record, The (Hackensack, NJ) Via Acquire Media NewsEdge) Oct. 3--The office market in Bergen and Passaic counties remained relatively unchanged in the third quarter, with availability rates and asking rents ticking up slightly, according to data released Thursday.

The availability rate for Class A, B and C office space in the five submarkets in the two North Jersey counties increased to 21.5 percent in the third quarter, compared with 21 percent in the second quarter, according to data provided by Grubb & Ellis, a commercial real estate services firm.

Asking rents in the two counties, meanwhile, rose half a percent to $25.45 a square foot of office space in the third quarter. Asking rents -- measured in weighted averages -- do not account for sweeteners like free rent and other perks landlords use to entice tenants in rough markets.

The data show a slight change for all of northern and central New Jersey, an area that encompasses land as far south as Monmouth County. The availability rate for office space in North and Central Jersey overall rose just 0.3 percent in the third quarter, compared to the previous quarter. Asking rents for office space decreased 0.2 percent to $26.44 a square foot in the same time frame.

"Many business sectors have been reluctant to make new capital investments, and that's sort of been curbing the appetite for additional office space," Stephen Jenco, director of research for Grubb & Ellis' offices in New Jersey, said in an interview.

Availability is the measurement of property available for lease, but the space may not be vacant and includes space available for subleasing. The office market data includes the top Class A space as well as Class B and Class C buildings.

The one sub-market in the area where rents slipped was Bergen East, where average weighted rents declined 0.5 percent in the third quarter. The Bergen East submarket includes towns such as Tenafly, Fort Lee and Cliffside Park.

While the availability rate for industrial space in northern and central New Jersey overall increased 0.5 of a percentage point in the three months that ended Tuesday, the availability rate in Bergen and Passaic sub-markets fell as much as 1.2 percentage points in the Central Bergen East submarket, which includes Tenafly, Fort Lee and Paramus.

The only exception was the Meadowlands sub-market, where the industrial availability rate rose 0.6 percentage point, to 10.3 percent.

Rents for industrial space rose nearly 6 percent in the third quarter in the Central Bergen East sub-market, to $7.56 a square foot, while they rose only 0.7 percent, to $6.13 a square foot, in northern and central parts of the state overall.

Of particular interest in coming months is the waterfront office market, where firms undergoing recent turmoil -- Lehman Brothers, Merrill Lynch, American International Group -- may shed office space.

"Those questions probably won't be answered for the next couple of quarters or so, or even into next year," Jenco said.

To see more of The Record, or to subscribe to the newspaper, go to http://www.NorthJersey.com.

Copyright (c) 2008, The Record, Hackensack, N.J.
Distributed by McClatchy-Tribune Information Services.
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