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News release

East Rutherford, N.J.

New Jersey’s Transit Hub Markets Still Outperform Suburban Markets

Transit hub vacancy rate in teens for more than 5 years, as office occupiers seek space in mass-transit centric markets


​​East Rutherford, N.J., September 11, 2017 — New Jersey's transit hub markets continue to outperform the state's suburban office submarkets, consistently boasting higher average asking rental rates and lower vacancies, according to JLL's Summer 2017 Transit Hub Perspective.

New Jersey's transit hub markets are expected to remain on the radar screen for a variety of business sectors. Companies are locating their operations in areas with a large population of millennials, in close proximity to walkable amenity-rich areas and with access to mass-transit options for their workforces and clients.

"Tenants are not just asking for building amenities, they are expecting them," said Stephen Jenco, Vice President and Director of Suburban Tri-State Research. "Savvy landlords are renovating properties and packing them with amenities to make their product stand out from the competition. Tenant enticements have included adding food trucks and high-end fitness centers. Look for other building owners to offer perks like subsidized ride-sharing programs, such as Uber and Lyft, to and from downtown areas or train stations."

New Jersey's urban and suburban transit hubs share a number of characteristics, including having a significant number of office properties clustered near or within a downtown, urban or town center; being located adjacent or proximate to a  NJ Transit rail station; and offering a mass transit commuting option within walking distance of the commuter's office location.

The state's urban transit hubs — Hoboken/Jersey City, Newark, New Brunswick and Trenton — are major office markets with access to rail transportation. The four suburban transit hubs — Metropark, Morristown, Princeton and Summit — are smaller markets with more local access, typically smaller office buildings and walkable amenities.

The overall transit hub market saw vacancy rates rise from 16.9 percent at year-end 2015 to 19.2 percent 12 months later. The increase was fueled by additional vacancies in the Hoboken/Jersey City urban transit hub during the past year. Overall, strong leasing activity in the suburban transit hub markets fueled a drop in vacancy rates from 17.5 percent at year-end 2015 to 16.8 percent one year later.

The state's transit hub markets continued to surpass their peers in the overall suburban New Jersey office market. The suburban average overall asking rental rate was approximately $26.02 per square foot at year-end 2016, while the overall transit hub rental rate neared $32.50 per square foot. This gap is unlikely to close soon, as the discrepancy in rents between the suburban market and overall transit hub market had remained more than $6.40 per square foot for the past two years.

One common theme shared between transit hubs and suburban markets is that high-end Class A space will remain the product of choice for office tenants. Nearly 85.0 percent of the leases completed in the state's office market during 2016 were concentrated in Class A buildings.

Additional highlights of the summer 2017 Transit Hub Perspective include:

• With nearly 16.0 million square feet of rentable office space, the Hoboken/Jersey City area houses the largest amount of rentable Class A space among the state's transit hub markets. While the Class A vacancy rate eclipsed 19.0 percent in 2016 compared to less than 14.0 percent in 2015, the additional vacancies will create opportunities for companies pursuing competitively priced Class A space options in proximity to Manhattan. In addition, economic incentives will continue to attract corporate investments to this market. With the average asking Class A rental rate just below $41.30 per square foot, the Hoboken/Jersey City area boasted the highest asking Class A rent among the transit hub markets.

• The Metropark suburban transit hub is one of the most strategic office locations in the state, owing to both its superior highway access and commuter rail service via Amtrak and  NJ Transit at the Metropark Train Station. The submarket maintains the highest Class A rental rate in the Central New Jersey office market, approaching $33.90 per square foot at the end of 2016 compared to $31.55 per square foot 12 months earlier.

For more news, videos and research resources from JLL, please visit the firm's U.S. media center web page. Bookmark it here: http://bit.ly/18P2tkv.

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 leading professional services firm that specializes in real estate and investment management. AFortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the second quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of nearly 80,000. As of June 30, 2017, LaSalle Investment Management had $57.6 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit ir.jll.com.