News
Meanwhile, Across The Hudson...
January 6, 2011
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| What’s our neighbor up to these days? A large lease, for one. Yesterday, Mack-Cali announced that Verizon New Jersey signed a five-year extension at 600 Horizon Center Dr in Hamilton, where it leases the entire 95k SF building. The deal, brokered by Cushman & Wakefield’s Marc Rosenberg, is good for the Garden State, considering that corporate restructurings countered Q3’s 655k SFof positive net absorption in Northern and Central Jersey’s office market. Grubb & Ellis NJ director of research and marketing Stephen Jenco tells us that 688k SF of negative net absorption occurred in Q4. The overall office availability rate was just above 23% at year end, compared to 22.6% in ‘09, while more than 35.6M SF of direct and sublet space was being marketed in ’10, compared to the previous year’s 34.7M SF. |
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| Despite the fluctuating quarterly absorption figures, Stephen says the office market (above: Jersey City) exhibited subtle signs of improvement, and the decelerating volume of negative absorption could indicate that companies have completed restructurings of excess real estate holdings. That, combined with increased demand, would help stabilize the Northern and Central NJ office market in the year ahead, he predicts. His forecast: Many biz sectors have beenreluctant to expand payrolls and make significant investments, which have curbed additional office space requirements. As a result, corporate relocations and restructurings—rather than significant real estate expansions—will likely define much of the market until the economic rebound gains traction, he says. |
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| Northern and Central Jersey’s industrial market (above: Port of Elizabeth) also had alternating quarters of negative and positive absorption, thanks to “the ongoing struggle waged between and supply and demand,” Stephen says. But an uptick in industrial requirements led to 3.4M SF of positive net absorption in Q4, and overall, the market saw 9.4M SF of positive net absorption for the year. This was in stark contrast to the 22.1M SF in the red in ’09, he points out. Going forward, expect a relatively empty construction pipeline and expanding industrial requirements, which will help stabilize the availability rate (now 12.5%, its lowest since early ’09). |
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| In another NJ deal, an entity controlled by Investcorp purchased the 549k SF Princeton Forrestal Village in Princeton for $55M. What do they get? A 42-acre campus with 10 freestanding office, retail, and restaurant buildings, with a lifestyle environment that includes pedestrian bridges, fountains, tree-lined streets, and gardens. (You know, typical New Jersey stuff.) It also includes a 294-key Westin Hotel (under separate ownership), a Ruth’s Chris Steak House, Salt Creek Grill, and Tre Piani restaurants. There’s also significant upside opportunity through the lease-up of vacant suites and potential conversion of certain retail suites to medical office use, particularly because of its one-mile proximity to the 630k SF University Medical Center of Princeton at Plainsboro under construction. CBRE’sJeffrey Dunne, Kevin Welsh, and David Gavin repped the seller and procured the buyer. |
