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News release

EAST RUTHERFORD, NJ

Corporate Restructurings, Relocations Match Demand for New Jersey Office Space

JLL reports slight increase in overall vacancy rate for Northern, Central New Jersey; Class A average asking rental rate slips lower


EAST RUTHERFORD, NJ, October 6, 2014 — After remaining unchanged at 25 percent during the first half of the year, the Northern and Central New Jersey overall vacancy rate inched 10 basis points higher to 25.1 percent during the third quarter of 2014, according to JLL. Pockets of demand countered by additional vacancies have effectively kept the market in check for the past several quarters.

Despite the higher overall vacancy rate, slightly more than 117,900 square feet of positive net absorption occurred in the office market during the third quarter, which ended a streak of four consecutive quarters of negative absorption. Demand for Class A office space in the Hudson Waterfront submarket was a leading factor behind the positive net absorption witnessed in Northern and Central New Jersey.

“The state’s lackluster jobs market has overshadowed the Garden State’s economy and the office market since the beginning of the year,” said Robert Kossar, executive managing director and market director for JLL’s New Jersey and Long Island operations. “New Jersey was among 24 states posting higher unemployment rates during August and the state’s unemployment rate has remained above the national rate for more than three years. In addition, the local employment market is expected to face strong headwinds in the coming months as the closing of four Atlantic City casinos has resulted in thousands of layoffs.”

The Northern and Central New Jersey office market posted nearly 2.4 million square feet of leasing in the third quarter of 2014, which represented a slight uptick from the two million square feet recorded at midyear. The state continues to weather a slowdown in activity compared with the volume of leasing in 2013. Year-to-date leasing activity remains two million square feet below the 8.2 million square feet of office leases signed during the first three quarters of 2013.

“While the life sciences and information/technology sectors were responsible for a large portion of the transactions signed during the first half of the year, banking/financial services companies stepped up to the plate during the third quarter,” said Stephen Jenco, vice president of suburban tri-state research. “This sector accounted for nearly 40 percent of the transactions completed in the Northern and Central New Jersey office market and two of the three largest leases signed, as JPMorgan Chase & Company and RBC Capital Markets absorbed blocks of space in the Hudson Waterfront. Going forward, with nearly two million square feet of potential office requirements, banking/financial services companies are expected to remain active segments in the office market.”

Highlights of the third quarter of 2014 include:

  • The Northern and Central New Jersey overall vacancy rate increased slightly to 25.1 percent, compared with 25 percent at midyear 2014. The overall vacancy rate remained above the 24.6 percent reported one year ago.
  • After edging higher for six consecutive quarters and approaching $27.75 per square foot in mid-2014, the Northern and Central New Jersey average asking Class A rental rate slipped below $27.60 per square foot. While new availabilities with higher asking rents fueled the earlier increases, the lower third quarter Class A rental rate was attributed to the absorption of higher-priced Class A office space in the Hudson Waterfront.
  • The state’s use of economic incentives to stimulate economic development and foster job growth generated recent office requirements in the Hudson Waterfront. With more than 375,920 square feet of positive net absorption, this submarket recorded the largest volume of absorption in the state. Contributing to this absorption was JPMorgan Chase & Co.’s leasing of 226,520 square feet at 480 Washington Boulevard in Jersey City. The global financial services firm committed to retaining 2,612 employees, while also creating 1,000 new jobs after received $224 million in incentives over 10 years. In addition, RBC Capital Markets LLC leased nearly 190,100 square feet at 30 Hudson Street after received incentives totaling $78.8 million over 10 years for bringing 900 jobs to Jersey City. The Hudson Waterfront Class A vacancy rate subsequently retreated below 15.0 percent — its lowest level since mid-2013.
  • Relocations and rightsizings will continue to influence the Northern and Central New Jersey office market through year-end as corporate real estate decisions focus on utilizing workspaces more efficiently while reducing operating expenses. With few expanding requirements, the office market is expected to remain in neutral gear through the end of the year.

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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 $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.​