Business Services Industry
With negative absorption, NJ seeing 16% vacancy rate
Real Estate Weekly, March 13, 2002
GVA Williams has produced its 2001 year end market analysis covering the New Jersey marketplace. According to the GVA Williams statistics, the New Jersey real estate market is revealing negative net absorption and an overall vacancy rate of over 16%. Several factors contributed to these trends including fading demand, as well as corporate space letting due to downsizing trends, consolidations and mergers.
One trend occurring in the marketplace according to GVA Williams continues to be that New Jersey corporations have placed the balance of their excess space on the market. Examples include AT&T and Lucent Technologies, occupants of several million square feet in multiple locations throughout the state, which are currently disposing of all excess supply due to severe cost cutting measures. In a relocation from lower Manhattan, American Express took approximately 500,000 SF of Lucent's former space at 5 Woodhollow Road in Parsippany (Morris County) and 195,000 SF of AT&T's former space at 101 JFK Parkway in Short Hills (Essex County). However, it was recently announced that American Express will be vacating these locations and relocating back to 3 World Financial Center in April of 2002. In addition, AT&T has recently announced the availability of its 1.35 million square foot corporate campus in Basking Ridge.
David Simson, president, GVA Williams, commented, "While overall market conditions have weakened in the 3rd and 4th quarters in New Jersey, we still believe that New Jersey is one of the strongest markets in the country and expect 2002 to be a rebounding year. Current conditions pose excellent opportunities therefore for tenants, investors and developers."
Despite increased vacancies, largely due to available sublease space and downward pressure from the macro economy, average-asking rents in New Jersey have remained steady. The overall strength and diversity of the New Jersey marketplace (24 fortune 500 companies of diverse industries are currently headquartered in New Jersey) has kept the New Jersey market balanced. From the ownership perspective, low debt to equity ratio interest rates remain low and occupancy remains at high levels. According to GVA Williams, much of the vacancy lies within the sublet markets and owners who have long-term leases in place have not yet been affected.
In 2001, GVA Williams experienced a dramatic increase in its business volume. The fast-growing firm has been awarded several million square feet of new sub-leasing and agency assignments including the high profile River Drive Center 3 development, a 103,498-SF block of Class A space in Elmwood. According to GVA Williams, demand is still strong for the large user in the market.
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