NEW JERSEY—According to a recently released report by Cushman & Wakefield, Inc., real estate activity in the second quarter of 2012 is gaining momentum.
“Increasingly positive trends are emerging in New Jersey ’s economy, including growing confidence in employment, and that is impacting real estate activity,” said Gualberto (Gil) Medina, New Jersey executive managing director.
According to Cushman & Wakefield, second quarter office leasing activity in northern New Jersey was off 27.8 percent from the same period of 2011, but the recent quarter was marked by an increase in activity over the first quarter, a trend that is expected to continue. In contrast, central New Jersey leasing activity was off 1.5 percent year over year and is showing growing momentum.
Northern activity was dominated by the Hudson Waterfront submarket where The Bank of Tokyo-Mitsubishi UFJ expanded by 100,274 sq. ft. at Harborside Financial Center III; Citigroup leased 92,554 sq. ft. at Newport Office Center VII; and Tower Insurance leased 76,892 sq. ft. at Harborside Financial Center II.
Central New Jersey saw a total of nearly 1.65 million sq. ft. of leasing activity for the quarter. Largest leases were United Healthcare’s 106,000-sq.-ft. renewal at 131 Morristown Road in Basking Ridge; and new leases by Brother International at 200 Crossing Blvd. in Bridgewater (101,754 sq. ft.); Allergan (93,000 sq. ft.); and Cognizant (64,000 sq. ft.), both at 200 Somerset Corporate Blvd. in Bridgewater; and Applied Communications Sciences’ 72,560-sq.-ft., full-building lease at 150 Mount Airy Road in Basking Ridge.
Investment sales activity in both regions rebounded from a slow first quarter.
Despite the activity, market fundamentals remain flat across the region according to Cushman & Wakefield. In northern New Jersey, vacancies for all classes rose 0.6 percentage points year over year to 17.9 percent, although Class A vacancies dropped 0.2 points from the first quarter to the second quarter. Direct average asking rents for all classes fell $0.09 per sq. ft. year over year to $25.92, while average asking rents for top Class A product rose $0.12 per sq. ft. to $28.82.
In Central New Jersey, leasing activity pushed overall vacancies down a full point year over year to 19.4 percent.
In the industrial market, despite a number of major transactions, including 30 warehouse/distribution transactions of more than 100,000 square feet, industrial leasing for the first half of 2011 in northern and central New Jersey experienced a 17.3 percent year-over-year decrease from 2011.
Industrial sales activity maintained a steady pace in the second quarter.
At the end of the second quarter, the New Jersey industrial market’s vacancy had fallen 0.4 percentage points to 9.2 percent.
“We believe that New Jersey ’s industrial market fundamentals will continue to slowly improve throughout the remainder of 2012,” said Medina. “Leasing activity is expected to remain strong, although it is not likely to approach what we saw in 2011. Vacancy rates can be expected to continue to fall, based on a combination of heightened leasing activity and little new product coming onto the market. Asking rents will rise as a result of the increasing demand for existing product.”