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JLL: Transit hubs still king in N.J. office market

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Newark Penn Station crossing Market Street.
Newark Penn Station crossing Market Street. - ()

New research by JLL reaffirms what real estate experts have been seeing for years — transit hub submarkets are the cream of the crop in New Jersey's office landscape.

The report by the brokerage firm found that those markets — a mix of traditional cities and suburbs that are well-connected by rail — consistently have higher average asking rental rates and lower vacancy than their suburban counterparts. And researchers said the trend shows no signs of slowing down.

The new JLL report defined the “Transit Hub Market” as the collection of areas characterized by one or more of these factors: a significant number of office properties clustered near or within a downtown, urban or town center; adjacent or close to an NJ Transit rail station; and offering a mass transit commuting option within walking distance of the commuter’s office location.

That left it with Hoboken/Jersey City, Newark, New Brunswick and Trenton as its main urban transit hubs, along with Metropark, Morristown, Princeton and Summit as its suburban transit hubs.

Its findings included:

  • Average asking rental rates in the overall Transit Hub Market were $29.57 per square foot at year-end 2013, up 3.5 percent from $28.56 at year-end 2012.
  • Rents in the suburban market were significantly lower: $23.24 per square foot at year-end 2013 and $22.65 per square foot at year-end 2012.
  • Vacancy in the transit hub group was 18.8 percent last year, up from 16.4 percent at year-end 2012.
  • Suburban markets posted a vacancy rate of 27.2 percent at year-end 2013, which was down from 28.9 percent at year-end 2012.

Robert Kossar, a JLL executive managing director and head of its New Jersey operation, said businesses in recent years have migrated to transit hubs throughout the state.

“Technology has helped produce a mobile workforce that is no longer constrained to dedicated offices and cubicles,” Kossar said, noting that younger workers are drawn to transit-centric urban locations. “For companies looking to tap into the innovation pipeline via Manhattan’s young talent pool, transit connectivity is critical.”

The largest transit hub in JLL’s report was identified as Hoboken/Jersey City, with 18.6 million square feet of total space and 16.2 percent vacancy. Researchers note, however, that vacancy has risen since 2011, when it was just above 11 percent.

As suburban transit hubs go, collective vacancy in Metropark, Morristown, Princeton and Summit declined from nearly 26 percent in 2009 to below 20 percent in 2013, the report said. Researchers highlighted a resurgence in demand for Class A space in Metropark — an area spanning Edison and Woodbridge — where vacancy has gone from 35 percent to below 22 percent during that time.

And despite higher vacancy rates in certain areas, transit-centric office markets will remain on the radar screen for companies seeking locations that are readily accessible to their employees, JLL said.

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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