7/30/2019 Seeing the Big Picture - Central New Jersey Office Rebounds From Recession

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10BMay 10 - 23, 2013 New Jersey Mid Atlantic Real Estate Journal www.marejournal.com

Central newJersey

During the past three yearsthe oice market in CentraNew Jersey has begun to recover. Since the frst quarteo 2010, the overall vacancrate has declined by 1.9%, anearly 1.4 million s/ o ofce space has been absorbedWhen measuring over threyears, the vacancy rate has decreased our consecutive quarters through the frst quarteo 2013, though at more modeslevels than during the previouthree quarters. While certainlnot at the level o consistenc

displayed prior to the GreaRecession, it appears the ofcmarket is strengthening.

Reasons or this succesinclude demand return in thpharmaceutical sector and thpopularity o commuter raimarkets such as Princeton anMetro Park. In addition, tenants have been either renewinor extending their leases unlesthey fnd a compelling reasonto make a costly move. Whilthere is still a glut o spacethere is not much that would bconsidered a trade up.

As a result, new constructioand newly renovated proper

ties have become attractiveExamples include Church anDwight, which recently tookoccupancy o a newly built250,000 s/ headquarters in Ewing. Eisner Amper and HatchMott MacDonald each signeleases at the new 111 Woo

Ave. South in Metro Park. EMCCorp. signed a lease or 81,68s/ at the newly renovatedCenter 78 in Warren, whilOtsuka America Pharmaceutical and Blackrock FinanciaManagement, Inc. moved intnew construction at University Square in Princeton. DrReddys Laboratories signe

new leases at College Rd. inPrinceton, and Novo Nordisk irenovating a 770,000 s/ acilitin Plainsboro.

This momentum is expecteto continue despite some obstacles, including MetLies announcement that it will close itSomerset ofce, which is a blowor the struggling PiscatawaySomerset submarket. Howeverother large blocks such as thBell Labs complex in Holmdeand the ormer Continental Insurance building in Cranburare being redeveloped, whichwill take nearly 2.5 millions/ o unused space out o th

equation, eectively lowerin

he oice market inCentral New Jersey isbeginning to show a

c o ns i s t e nttrend o im-proving occu-pancy levels,much like itdid prior tot h e G r e a tRecess ion.The overallvacancy ratehas decreased or six o the pastnine quarters, and while quar-terly comparisons give some

By Matthew J. Dolly, Avison Young

Seeing the big picture: Central New

Jersey ofce rebounds rom recessionT

improvement when compar-ing three-year trends or nineconsecutive quarters endingduring the irst quarter o2008. As the economy beganto spiral downward, the ofcemarket trailed. For 16 quar-ters, vacancy rates climbedconsistently.

While the Great Recessionlasted rom December 2007through June 2009, the Na-tional Bureau o Economic Re-search did not make it ofcialuntil December 2008. Busi-nesses, however, anticipated

the announcement throughout2008 and the commercial realestate market lagged. For eightstraight quarters between thesecond quarter o 2009 and thefrst quarter o 2011, vacancyrates were at least our pointshigher when making three-year comparisons, peaking at6.2% during the ourth quartero 2010, immediately ollowingthe announcement that therecession ended in June 2009.The increase accounted ornearly 5.5 million s/ o spacebeing returned to the market.

indication o market direction,a more thorough picture devel-ops when analyzing data overa longer period.

When compared year-over-year, the overall vacancy rateis virtually unchanged as o thefrst quarter o 2013, as 20.3%o inventory is available orlease, compared to 20.0% a yearago. However, when studyingthe rate over a three-year pe-riod, the market appears to beimproving at a steady pace.

Prior to the Great Recession,the oice market exhibited

Matthew J. Dolly

continued on page 12B

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