Moving forward in 2014, negative absorption will likely be reversed as numerous large leases currently in negotiation in the Morristown submarket close.
Chatham, NJ (PRWEB) January 24, 2014
Cassidy Turley, a leading commercial real estate services provider in the U.S., today released its Fourth Quarter Office Market Snapshot for Northern and Central New Jersey. Overall, both markets had a strong year and show signs for continued recovery into 2014.
Northern New Jersey asking rents rose to $25.21 in the fourth quarter, an indication of improving conditions within the office market. Even though Northern New Jersey posted 249,445 square feet of negative absorption for the quarter, total absorption over the year was positive, at 539,975 square feet, the most recorded in the past five years. Vacancy was up 30 basis points from the previous quarter, climbing to 15.4 percent, but still lower than the 15.8 percent recorded in the fourth quarter of 2012.
Northern New Jersey performance was impacted by large corporate relocations such as GAF purchasing 1 Campus Drive causing 186,638 square feet of positive absorption within the Parsippany submarket. Alternatively, the 474,736 square feet of negative absorption in the Morristown submarket was due in part to the closing of Pfizer’s sale of 5 Giralda Farms and Maersk looking to sell and move from its current address. Many of the key economic indicators point to positive gains in the office market compared to the previous year. The Northern New Jersey unemployment rate decreased 240 basis points while the overall unemployment rate for the country dropped to 7.2% in the fourth quarter of 2013, this quarter compared to 7.8% in the fourth quarter of 2012.
Moving forward in 2014, negative absorption will likely be reversed as numerous large leases currently in negotiation in the Morristown submarket close. The economy will withstand the phasing out of quantitative easing, and 2014 will be another year of growth for the New Jersey commercial market. In addition, positive trends such as an increase in private sector employment and a resurgence of corporate investment will lead to a thawing of the capital markets as suburban office markets come back into favor with both lenders and investors.
Central New Jersey stabilized in the fourth quarter of 2012 with five of the seven submarkets posting positive absorption. Only two submarkets, Princeton Area and Monmouth County, experienced a dip in performance. The Princeton Area had an increase of 50 basis points in vacancy from the third quarter to 12.2%. Monmouth County posted 17,612 square feet of negative absorption for the fourth quarter. Supply outpaced demand this quarter, effectively driving down asking rents. Total net absorption for the fourth quarter was negative 48,241 square feet, and average asking rates decreased to $23.44 from $23.79 per square foot in the third quarter.
On the brighter side, Central New Jersey overall absorption was positive in 2013, coming in at just over 1.1 million square feet, a considerable improvement compared to the negative 484,740 square feet in 2012. Class A office buildings totaled 1.6 million square feet of net absorption.
Looking ahead into 2014, the market is on its way to recovery. In the fourth quarter, 334,967 square feet of office space is under construction, and 314,442 square feet will be completed during the year. A delivery in the Princeton Area along with two new properties coming to the market will boost performance. These buildings have a combined 117,329 square feet preleased, which will decrease vacancy in the area. Market fundamentals are strengthening as unemployment in Central New Jersey decreased 250 basis points, creating a favorable outlook for 2014.
“There were strong gains throughout 2013, and all major economic indicators are pointing to an even better 2014,” said Raymond Trevisan, Managing Principal, Cassidy Turley. “Understanding the ebbs and flows of the market place enables us to give the best possible service to clients and maximize their real estate solutions.”
About Cassidy Turley
Cassidy Turley is a leading commercial real estate services provider with more than 3,800 professionals in more than 60 offices nationwide. With headquarters in Washington, DC, the company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2012, manages approximately 400 million square feet on behalf of institutional, corporate and private clients and supports more than 23,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit http://www.cassidyturley.com for more information about Cassidy Turley.