The commercial office market in New Jersey remains "tenant favorable" but is likely to tighten over the next year, according to the first quarter 2011 National Office Occupier Outlook from Jones Lang LaSalle.
The report said northern New Jersey had one of the highest first quarter vacancy rates in the country — 25.9 percent — and, "in the short term, tenants will continue to have the advantage as landlords remain aggressive with concession packages in hopes to lure new tenants to their building." However, the New Jersey market is changing as the economy strengthens: "Some landlords are being more resistive in the lowering of asking rents, a sign that the window of opportunity for tenants could be slowly closing within the year."
The report said larger tenants, seeking 100,000 or more square feet, "have over 50 options to choose from, most of which lie within the suburban areas of New Jersey. Meanwhile, less expensive sublease space continued to dwindle, pushing the sublease vacancy rate below the 4 percent mark for the first time in over four years. This could in turn begin to push taking rents higher in coming months."
In its nationwide overview, Jones Lang LaSalle, a financial and professional services firm specializing in real estate, said an increase in office space demand was recorded in the first quarter in select market segments with concentrations of growth industries such as technology, energy and professional services.
"Companies in high-growth sectors are beginning to explore leasing options to accommodate increases in hiring, gain strategic access to new workers, and improve the productivity of their workspace," said Stuart Hicks, CEO of Corporate Solutions at Jones Lang LaSalle. "While economic recovery is under way, corporate real estate executives are tasked with implementing strategies to support this growth while still aggressively managing cost and risk, all while developing workplaces that enhance productivity."
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