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News release

New York, NY

JLL Reports Higher Newark, Hudson Waterfront Trophy, Class A Office Rents

Spring 2014 Skyline Review reports recent high-end vacancies, combined with state’s recharged economic incentives program, to create opportunities for companies


NEW YORK, June 19, 2014 — Although overall vacancy rates have increased for high-end product in Newark and along the Hudson Waterfront during the past year, trophy and Class A office buildings within these submarkets saw rising average asking rental rates, according to JLL’s spring 2014 Skyline Review for both markets.

Despite high vacancy rates, the spring 2014 Skyline Review reported that average asking rental rates for trophy and Class A office buildings in the Newark and Hudson Waterfront markets trended higher during the past year as landlords remain bullish on potential demand for office space within these high-end buildings. Trophy buildings in Newark posted rents of $34.47 per square foot, an increase of 1.4 percent from $33.99 per square foot one year earlier. Buildings along the Hudson Waterfront recorded rates of $38.24 per square foot, an increase of 3.4 percent from $36.99 per square foot one year earlier. In comparison, the state’s Class A buildings posted rents of $27.73 per square foot in spring 2014 compared to $26.81 per square foot one year earlier.

“Although the amount of available office space in Newark and the Hudson Waterfront has increased significantly during the past year, both markets still boast the lowest overall vacancy rates in New Jersey,” said Robert Kossar, executive managing director and head of JLL’s New Jersey and Long Island operations. “Combined with the state’s newly overhauled economic incentives program, the increase in available space has created opportunities for companies to relocate their operations into two of the most important, transit-centric markets in New Jersey.”

JLL’s proprietary Skyline Review identifies and tracks micro-segments of 43 city centers across the nation. The Skyline features trophy and Class A buildings where tenants and investors alike focus demand for office space in a flight to quality and efficiency. The Newark Skyline includes trophy and Class A office buildings totaling more than 5.8 million square feet, while more than 16.0 million square feet is tracked along the Hudson Waterfront.

Newark
New Jersey’s economic incentives programs have played a pivotal role in revitalizing downtown Newark in recent years. In mid-2013, Panasonic moved its North American headquarters from Secaucus to Newark after receiving more than $100 million in financial incentives. Prudential Insurance obtained more than $210 million in tax credits to relocate its headquarters into a new 740,000-square-foot office building on Broad Street near Military Park. While this activity certainly benefitted the city, the overall vacancy rate for Newark’s trophy and Class A buildings increased seven percentage points from spring 2013 to 15.0 percent in response to Prudential placing most of its current office space at Gateway Center onto the market.

Hudson Waterfront
The Hudson Waterfront houses the largest concentration of banking/financial services firms in New Jersey. Competitive rental rates combined with a mass transportation system linking directly to the financial markets of Lower Manhattan have driven this migration. Many of these firms maintain their corporate headquarters in Manhattan, while locating their support operations to the Hudson Waterfront. Media, pharmaceutical, publishing and technology companies are also increasing their footprints in this strategically located market. Among the largest transactions recently completed was Forbes Media’s lease for 93,000 square feet at 499 Washington Boulevard. Forbes was awarded $27.0 million in economic incentives to relocate from Manhattan.

Corporate consolidations and restructurings boosted Hudson Waterfront vacancy rates from spring 2013. A 333,000-square-foot block at Goldman Sachs’ 1.4 million-square-foot building at 30 Hudson Street is among the largest availabilities in that market. The overall vacancy rate for the Waterfront’s trophy and Class A buildings increased nearly six percentage points from spring 2013 to approximately 16.7 percent one year later.

JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 500 professionals and support staff providing agency leasing, tenant representation, industrial services, strategic consulting, project and development services, property management and investment sales/capital markets services to New Jersey's leading corporate tenants, investors and landlords. The firm, which assists clients from three full-service offices in Parsippany, Iselin (Metropark) and East Rutherford, also acts as local service provider for JLL global and national corporate clients in need of real estate assistance in New Jersey.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.