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News release

Parsippany, NJ

New Jersey Office Vacancy Experienced Most Significant Decline Since Early 2005

Robust leasing activity and office building purchases drop NJ vacancy rate to 25.6 percent


PARSIPPANY, N.J., Oct. 11, 2010 —The New Jersey office market vacancy rate dropped 0.8 percent to 25.6 percent during the third quarter according to new research by Jones Lang LaSalle.  Although the drop is slight, it represents the most significant decline in overall vacancy since the first quarter of 2005. The State’s third quarter vacancy rate is the lowest in five consecutive quarters and indicates that there is less than 40 million square feet of office space available. This may point to the market hitting bottom and stabilizing in the future.

“This vacancy rate drop is due to a combination of factors, a decline in new product being placed on the market, robust leasing activity, and several transactions by large users purchasing buildings for their own use,” stated Dan Loughlin, Managing Director at Jones Lang LaSalle. “Year-to-date leasing activity is well ahead of last year’s pace, another key positive indicator; however, vacancy levels are not anticipated to decrease significantly until New Jersey experiences consistent job growth.”

Highlights in New Jersey’s office market during the third quarter of 2010 include:
  • While the Statewide vacancy rate was 25.6 percent during the third quarter, in Northern New Jersey it fell to 22.4 percent from 22.8 percent, while the rate in Central New Jersey remained unchanged at 31.8 percent.
  • When a handful of the market’s largest blocks of space, which cannot accommodate most tenants' requirements today are eliminated from the vacancy rate, New Jersey office vacancy declines several percentage points to 23.1 percent.
  • Statewide average asking rents stood at $23.85 per square foot, a decline of $0.08 from the previous quarter. The decline is largely attributed to a $0.17 drop in average rents in Central New Jersey, which stood at $22.98. Rents in Northern New Jersey dropped a penny to finish at $24.80.
  • There have been 15 lease transactions completed this year so far in excess of 100,000 square feet, five more than were signed in the whole of2009. There were three such deals in the third quarter, including a 270,972-square-foot renewal and expansion in Jersey City. Other major deals this quarter included a 161,683-square-foot renewal and expansion in Secaucus and a 123,080-square-foot new lease in Berkeley Heights.
  • Strong sales activity also helped to lower the vacancy rate in New Jersey. Major sales included the purchase of a 162,405-square-foot building in Somerset, a 152,261-square-foot building in Parsippany, and a 72,000-square-foot building in Bridgewater, all three of which are Class A buildings.

Jones Lang LaSalle’s team of in-house research professionals compiles the office market report, which provides an extensive analysis of the New Jersey real estate office market.  The firm is regarded as one of the most respected full-service brokerage, management and advisory firms in the commercial real estate industry.

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.6 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $38 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.