Six of the country's 10 most prominent suburban office markets have seen vacancy tick down since the recession ended, but northern New Jersey isn't among them.
Instead, vacancy has risen about 2 percent from mid-2009, to 19.1 percent in the first quarter of this year, according to new research from Cushman & Wakefield. That puts the region alongside submarkets like northern Virginia, Atlanta and Philadelphia, which have upticks ranging from 0.2 to 5 percent during that time.
While northern Virginia has suffered from federal downsizing and defense cuts, the Garden State's affliction is more a case of being overbuilt, said Gil Medina, executive managing director for Cushman & Wakefield's three offices here. Together, North and Central Jersey have more than 150 million square feet of commercial office space, including many now-vacant complexes that total millions of square feet individually.
"You have a lot of very large assets that contribute to this vacancy rate, and once we find a way to reposition those assets … we're going to see this vacancy rate drop," Medina said. He noted that 80 percent of the region's office space was built in the 1980s.
Efforts are underway to redevelop some properties in such a way as to remove millions of square feet of space from the market, he said.
The list released by Cushman & Wakefield also includes Central Jersey, which has seen vacancy fall slightly by 0.5 percent, to around 20 percent, since the recession ended in June 2009. The report notes that the region has started to stabilize, thanks largely to leasing activity in the Metropark and I-78 submarkets.
Among the five other submarkets where vacancy has fallen, Houston's 4.8 percent swing is leading the way, the report found. Driven by the energy sector, the Texas city has experienced strong job growth, and now has 4.3 million square feet of new office space under construction, a far cry from northern Virginia.
"You have two kinds of regions that are responding differently to the recession," Medina said.