NORTHERN NEW JERSEY
In northern New Jersey—notably in Hudson, Morris, Essex, and Middlesex counties—a litany of financial firms have renewed leases even as new tenants have rushed forward.
Earlier this year, New Jersey Governor Chris Christie and other public officials convinced Panasonic to relocate from Secaucus to a new office tower on Raymond Boulevard in Newark with the help of a $102 million transit hub tax credit.
In September, Deutsche Bank inked a seven-year renewal at its 204,515-square-foot office space at 2 Gatehall Drive in Parsippany, where it has been since 2002.
Merrill Lynch, meanwhile, re-upped its 300,000-square-foot lease at 95 Greene Street in Jersey City. And after threatening to leave New Jersey altogether—an always effective threat, as aforementioned deals have evidenced—British publishing firm Pearson Education is planning a move from Upper Saddle River to a yet-to-be-built waterfront development in Hoboken. Pearson received $82.5 million in tax credits from the state.
As Panasonic and Pearson have proved, companies are showing renewed interest in New Jersey’s modern, rail-ready office portfolio, especially where it concerns urban locales.
“If you’re an owner of real estate in New Jersey and you’re sitting on that type of product, you’re going to be quite happy with your results,” said Gregory Barkan, senior vice president at CBRE, who added that tenants are choosing cities over the suburbs. “But if you’re sitting on that antiquated, kind of commoditized vintage-type product that seems to be pretty prevalent in New Jersey I think you have some heavy lifting.”
The vacancy rate for Jersey City has been low, currently standing at 9 percent. The asking rent for the area is $27.39.
Jersey City—which boasts 16.6 million square feet of office space out of the 20.7 million for all of Hudson County—currently has 8.1 million square feet of proposed new space in the pipeline, said Mr. Sammons. This bodes well for future tenants, but not for those who need space post-haste.
“They have no product available in the near term for a major tenant,” said Mr. Sammons. “They can build fast enough, faster than you can in Manhattan. But most of the development sites recently have been for residential and not for office.”
NASSAU AND SUFFOLK COUNTIES
Nassau and Suffolk counties, meanwhile, are waiting for the market to turn.
In Nassau, the county tallied a vacancy rate of 16.l percent, with an asking rent of $29.99. Deals like Astoria Federal Savings’ lease for 55,000 square feet of space at 1 Jericho Plaza in June have been decent-sized, but certainly nothing to write home about.
In Suffolk County, the vacancy rate clocked in at 18.5 percent, down from 20.8 percent in March. That drop has been an encouraging sign, but still a far cry from high 2007 levels.
“This is surely not part of the go-go years,” said Chuck Tabone, a managing principal at Newmark Knight Frank.
The most notable deal happened at 5000 Corporate Court, a 264,482-square-foot property in Holtsville in Suffolk County purchased by Government Properties Income Trust for $39.3 million in September. Located just off the Long Island Expressway, the asset is already home to the IRS and the Bureau of Customs and Immigration Services and boasts more than 37 acres.
Despite its accessibility, however, the building has failed to impress Big Apple tenants.
“[Nassau and Suffolk are] too far off the grid for tenants in Manhattan, unless they are a call center or something like that,” said Mr. Sammons.