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News release

EAST RUTHERFORD, NJ

Green Signals, Clear Tracks Ahead for New Jersey’s Transit Hub Markets

Office tenant requirements fuel demand in mass transportation-accessible areas, driving vacancies lower, boosting rents higher


EAST RUTHERFORD, N.J., April 11, 2016 — New Jersey’s transportation-centric office markets remain at the center of commerce and lifestyle destinations throughout the state, according to JLL’s Spring 2016 Transit Hub Perspective. Statistics show that the state’s transit hub markets consistently perform better than its suburban counterpart, boasting higher average asking rental rates and lower vacancy rates.

New Jersey’s transit hub markets are expected to remain very active going forward due to the increased importance and buying power of millennials, who comprise one of the largest generations in history. Millennials will soon move into their prime spending years and are poised to reshape the economy.

“Millennials are demanding unique experiences and it’s going to change the way we buy and sell, and force companies to examine how they do business for decades to come,” said Robert Kossar, executive managing director and market director for JLL’s New Jersey operations. “Quality of life and balance are important to them, so they prefer a work/live/play environment close to family and friends. They choose to live in transit hubs where they have multiple transportation options for work and socializing.”

JLL defines transit hub markets as areas possessing one or more of the following attributes: a significant number of office properties clustered near or within a downtown, urban or town center; adjacent or proximate to a New Jersey Transit rail station; offering a mass transit commuting option within walking distance of the commuter’s office location. Transit hub markets are further subdivided into urban and suburban transit markets. Urban transit hubs include Hoboken/Jersey City, Newark and New Brunswick. Metropark, Morristown, Princeton and Summit are submarkets in the suburban transit hub category.

Demand for office space near public transit hubs pulled the overall transit hub vacancy rate down from nearly 19 percent in 2014 to less than 17 percent one year later, while the suburban vacancy rate remained above 27 percent. Furthermore, Class A space was the product of choice for office occupiers in transit hub markets. The Class A vacancy rate in these markets slipped below 15 percent at year-end 2015, compared to 16.3 percent in 2014. “The Class A transit-oriented work environment is increasingly important to companies to retain as well as recruit new employees,” said Stephen Jenco, vice president of JLL’s suburban Tri-State research.

The lack of new construction, combined with the growing appetite for space in transit hub markets continued to exert downward pressures on Class A asking rental rates. The transit hub Class A rental rate increased nearly $0.30 during the past year to $35.10 per square foot at year-end 2015. This was in contrast to Class A asking rents in the suburban New Jersey office market, which dropped to $25.66 per square foot.

Additional highlights of the spring 2016 Transit Hub Perspective include:

  • The state’s use of economic incentives to attract corporate investments was a leading factor behind recent demand seen in the Hoboken/Jersey City Urban Transit Hub Market. The Hoboken/Jersey City Class A vacancy rate had fallen below 14 percent at year-end 2015 compared to 15.3 percent one year ago. This market boasted the lowest Class A vacancy rate out of all the Transit Hub Markets.
  • The Metropark suburban transit hub’s access to the Northeast Corridor rail line, combined with its proximity to several major highways, encouraged office users to pursue space holdings in this strategically located Central New Jersey market. The Class A vacancy rate plunged from 21percent in 2014 to less than 17 percent at year-end 2015. With a Class A asking rental rate of $31.55 per square foot, this market registered the highest Class A rental rate in Central New Jersey.

JLL is a leader in the northern/central New Jersey commercial real estate market, with more than 1,000 professionals and support staff providing agency leasing and property marketing, tenant representation, industrial services, strategic consulting, occupancy planning, workplace strategies, project and development services, property and facility 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 a local service provider for JLL’s global and national corporate clients in need of real estate assistance in New Jersey. JLL’s New Jersey operations were honored by NJBiz magazine as one of its 2015 Best Places to Work 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. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 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.