Princeton office market remains on solid ground

Real Estate Weekly, March 7, 2001 by Vincent Marano

Given the uncertainties of Wall Street and the possibility of a slowing economy ahead, many in New Jersey's commercial real estate community are wondering if the good times are drawing to a close. At National Business Parks we are keeping an eye on the long-range prognosis, but nonetheless, we are extremely optimistic about the prospects for the year 2001.

We are guardedly optimistic about the long term outlook for the American economy and its impact on premier commercial office space. Of all the economic sectors, we feel that real estate, with its strong absorption rates and pre-commitment by tenants, is now in a strong enough position to remain on solid ground. Princeton, in particular, will continue to benefit from sustained demand and limited new supply.

Demand for new office space in Princeton remains strong with projections for absorption of more than one million SF of space in 2001. Pre-leasing and absorption have been outpacing new development, leaving no large size space available in the market. And major signposts seem in favor of continued economic health. Employment is still strong and consumer spending, while somewhat constrained, is still high.

Demand for Princeton office space has pushed average rents to the upper $20' s per SF. In the area, tenyear leases are standard, with work letters a modest $7 to $10 ver SF. Of course, the rising costs of energy and a sliding stock market warrant our concern for the long term, but a Republican administration in the White House, with its business-friendly point -of-view, should help encourage market confidence and continued demand for new office space.