PARAMUS-- CresaPartners recently completed its third quarter market analysis of the northern New Jersey tenant office sector.
According to research prepared by Robert D. Rencarge, senior advisor of CresaPartners' Paramus office, just as the third quarter came to a close, the economic climate exhibited its most dramatic downturn in many years.
The region's commercial real estate market continued to feel the gradual effects of a slowing economy. Specifically, the office market in New Jersey experienced a decline in leasing activity, which is anticipated to continue for the next several quarters. Overall the market trends that are evolving include: tenant leasing costs decreasing, changes in financial markets having a negative impact on the office market, and landlords finding it difficult to finance cash concessions tenants demand.
At the close of the third quarter, while Class A office buildings in northern New Jersey experienced a slight increase in vacant space, Class B remained flat. Statistics indicated that new Class B leases hit the lowest quarterly figure in ten years. In the third quarter of 2008, the northern New Jersey marketplace was producing an average rental rate of $28.49 psf for Class A office space, which was up from $28.22 per foot obtained in the second quarter. Class B office space obtained an average asking rent of $22.85 psf in the third quarter, slightly higher than the $22.77 psf received in the second quarter.
Major transactions completed in the third quarter of 2008 in northern New Jersey include:
-- Korea Express, a global logistics company, leased 225,000 sf of industrial space in South Brunswick.
--Reckitt Benckiser, manufacturer of household cleaning products, leased 163,000 sf of office space in Parsippany.
--HSBC, one of the country's top financial organizations, leased 110,000 sf of office space in Bridgewater.
--Arch Insurance, a property, casualty & specialty insurance provider, leased 107,000 sf of office space Jersey City.
* Topcon, an optical systems company, leased 85,000 sf of office/flex space in Oakland.
* Forest Labs, pharmaceutical company, leased 35,000 sf of office space in Jersey City.
* Curtiss Wright, an engineering technology company, leased 30,000 sf of office space in Parsippany.
* Ralcorp Holdings, producer of private label store brand food products, leased 28,000 sf of office space in Parsippany.
* JBA Associates, automobile insurance providers, leased 27,000 sf of office space in Saddle Brook.
Positively, CresaPartners' third quarter reports indicate that from the tenant's perspective opportunities abound for lease negotiations. These tenant opportunities include generous rental abatements and construction funding that comes with long-term leases, and concessions that may offset low cost recovery for currently leased facilities. According to Rencarge, tenants with three years or less remaining on leases should explore the market and consider strategic alternatives that make financial sense.
CresaPartners
www.cresapartners.com
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