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News release

Parsippany, N.J.

Jones Lang LaSalle Reports 2010 New Jersey Office Market Leasing Activity Up from Last Year

Fourth quarter NJ office market vacancy remains flat; robust leasing activity offsets large space dispositions


PARSIPPANY, N.J., Jan. 10, 2011 — New Jersey’s office market is showing signs of improvements as overall leasing activity increased in 2010 over 2009, according to year-end research by Jones Lang LaSalle. In 2010, New Jersey leasing velocity totaled more than 9.1 million square feet, an 8.3 percent increase over 2009’s total of 8.4 million square feet.

In addition to an increase in last year’s leasing velocity, the fourth quarter was particularly robust totaling more than 2.2 million square feet. Also, 18 leasing deals greater than 100,000 square feet were completed in 2010 marking the highest number since 2006.

“During the fourth quarter, most of the transactions were completed in Class A buildings in office submarkets in Hudson, Morris, Somerset and Mercer counties,” noted Dan Loughlin, Managing Director at Jones Lang LaSalle.  “Asking rents for Class A buildings inched higher during the quarter by $0.02 per square foot, while New Jersey’s overall asking rent also increased to $23.89 per square foot.”

Despite an improvement in leasing activity, the New Jersey office market continued to show weakness as office market vacancy rates remained flat rising 0.1 percent to 25.7 percent during the fourth quarter.  This was exacerbated by 13 blocks of space in excess of 50,000 square feet that were returned to the market during the quarter. Also, total available sublease space increased during the quarter by 200,000 square feet. Central New Jersey experienced the largest gain in available space, up to 31 percent. New Jersey office submarkets including Route 24 and the Meadowlands also experienced significant gains in available space.

“While a number of large spaces were added to the marketplace during the fourth quarter, health services, financial services, and pharmaceutical firms each leased more than 220,000 square feet, helping to offset these dispositions,” stated Loughlin. “We believe the uptick in leasing velocity in the fourth quarter and 2010 overall points to a recovery beginning in the New Jersey office market and is also evidenced by stabilizing asking rents in Class A space and overall.” 

Highlights from the fourth quarter  2010 report include:

• There were 18 lease transactions completed in 2010 in excess of 100,000 square feet, the highest total since 2006, eight more than were signed in the whole of 2009. There were three such deals in the fourth quarter, including an 189,999-square-foot new lease in Morristown; an 117,000-square-foot new lease in Clinton; and an 184,998-square-foot renewal in Jersey City.

• Of the 18 lease transactions in excess of 100,000 square feet, seven consisted of renewals. In the fourth quarter, renewals accounted for more than 30 percent of all signed deals, as landlords remained aggressive with concession packages.

• The majority of leases signed were in Class A properties, as tenants continue to find value within quality assets. Compared to last year, there was more touring activity, as tenants who were once hesitant to enter the market amid economic uncertainty have now decided the worst has passed.

• A significant amount of the fourth quarter activity occurred within Hudson, Morris, Somerset, and Mercer counties.

• Much of the space added to the marketplace occurred in Central New Jersey, pushing its vacancy rate from 30.5 percent to 31 percent. Meanwhile, available space diminished in the Northern part of the state as healthy activity offset large space dispositions in the Route 24 and Meadowlands submarkets; the Northern New Jersey vacancy rate fell to 22.2 percent from 22.4 percent.

• Much of the space added in recent months was within Class A buildings, pushing the Class A vacancy rates to 25 percent; slightly lower than a year ago.

• While available direct space remained flat through the fourth quarter, sublet space climbed by almost 200,000 square feet, causing the sublet vacancy rate to inch up from 4 percent to 4.1 percent.

• Asking rents within Class A properties rose in recent months due to the addition of higher priced, quality space to the market, coupled with landlords keeping their asking rents at current levels. Meanwhile, within Class B space, asking rents remained stable as a decline in cheaper sublease space offset the minimal rent adjustments by some landlords hoping to attract new tenants. Overall, average asking rents rose in the fourth quarter from $23.85 to $23.89. Since a year ago, the overall asking rental rate for the state has experienced little movement.

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. 

Jones Lang LaSalle is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, facilities management, consulting, and project and development services. In 2009, the New York tri-state team completed approximately 21 million square feet in lease transactions, concluded property sales transactions valued at more than $1.75 billion, managed projects valued at more than $4 billion, and oversaw a property and facilities management portfolio of 76 million square feet.
 
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 $40 billion of assets under management. For further information, please visit our Web site, www.joneslanglasalle.com.