New Jersey's mid 90's feels like the 80's

Real Estate Weekly, June 26, 1996 by Seena Stein

At the end of the first quarter of this year, the vacancy rate for the state was recorded at 19.8 percent, down from 21.4 percent a year ago. Average asking rents for Class-A space moved up from $20.35 per square foot to $20.58 per square foot. Class-B space fared better moving up to $17.60 per square foot from $16.77 per square foot. Even Class "C" space became dearer, costing $15.22 per square foot at the end of this year's first quarter as opposed to $14.91 per square foot last December. The tightening of the market is no aberration and these statistics confirm positive net absorption for all classes of buildings which, together, absorbed a total of 2,537,908 square feet in the first quarter of 1996.

And what's been the impact of the layoffs (estimated at approximately 5,000-7,000) at AT&T? Surprisingly, in the aftermath of the downsize, there has not been a visible commercial real estate fallout. Although we expected to see blocks of vacated AT&T space thrown onto the market, the company has done precisely the opposite by committing to leases in buildings in areas such as Bridgewater, Piscataway and Florham Park. Additionally, the telephone giant just moved into approximately an 800,000 square foot self-built facility along Route 78.

Psychologically, professionals in the real estate industry feel upbeat again. There's movement, there's capital, the excitement is contagious. New Jersey is experiencing growth in all sectors and the state is light-years ahead of New York which is still vastly overbuilt. We're doing a number of deals in New Jersey in conjunction with brokers in our New York City office. REIT's are busier than ever looking for product. Prices have stabilized, and there are virtually very few give aways.

Of course, the demand for product has increased the demand for more professional services. In order to see the same sizable commissions as yesteryear, a broker might have to do four small deals as opposed to one large one. I'm reminded of the Equitable deal I transacted, virtually single-handedly, in 1985. The insurance giant consolidated a number of offices into one building in Secaucus. It was a major deal; yet, I was never required to supply any additional services for them other than knowing my product and owners. Things are very different today as brokers need to offer a round robin of diverse services to clients including financial analyses, construction management, property management, space planning, relocation advice, legal consulting, and expertise in zoning issues, to name a few.

SEENA STEIN, SIOR President Newmark Partners, Inc.