Real Estate Journal — New Jersey — August 15 - 28, 2014 — 11B


M id A tlantic

C entral N ew J ersey Avison Young releases second quarter 2014 New Jersey office market analysis Economic Opportunity Act boosts activity as New Jersey suburbs see uptick in office leasing N EW JERSEY — Ag- gressive incentives from the landmark until 2018.

outlook for the office market remains positive, as recent studies have indicated that business owners are optimis- tic about near-term company growth and hiring initiatives.” Avison Young reports that, during the second quarter, New Jersey’s unemployment rate decreased to a six-year low, improving to 6.8%. A slow, but steady, economic recovery in the state has opened the door for growth in the small- business sector, although the firm cautions that the regional economy is not expected to reach its peak employment

central New Jersey was char- acterized by new availabilities in class A office space. In total, approximately 1 million s/f of space entered the market dur- ing the second quarter as the overall vacancy rate rose to 19.8% from 18.7% in the previ- ous quarter. Several large spaces hit the market in central New Jersey during the period, according to Avison Young. One of the most significant such offices was occupied by Avaya, whose +/- 300,000 s/f space in Basking Ridge is now on the market, after the firm sold its corpo-

rate headquarters less than a year ago. Further south, Mer- rill Lynch left its 330,000 s/f space in Pennington as long anticipated layoffs took their toll. In Metro Park, 153,000 s/f of space became available as JPMorgan expands to its regional hub in Jersey City. According to Avison Young, the departure of several busi- nesses fromcentral NewJersey left an abundance of high- quality, in-demand office space available in the area as asking rents rose for the third consecu- tive quarter, reaching $23.12 p/s/f. n

Northern New Jersey During the second quarter of 2014, large-scale absorption in neighboring well-located suburbs helped to offset more than 500,000 s/f of commercial space coming to the market in the region. Overall, this leas- ing activity, spurred by EO13, slightly lowered the overall vacancy rate in northern New Jersey to 22.4% from 22.6% in the previous quarter. Central New Jersey While northern New Jersey recorded office market expan- sion, second-quarter activity in

New Jersey Economic Op- portunity Act of 2013 (EO13) continue to stimulate office leasing and renewals in the state as companies target large blocks of space primarily in the suburbs, according to Avi- son Young ’s second quarter 2014 New Jersey office market analysis. “In a strengthening state economy and stabilizing office market, companies in New Jersey continue to take ad- vantage of the unprecedented incentives offered under the latest legislation,” said Jef- frey Heller , Avison Young principal and managing direc- tor of the firm’s New Jersey office. “Whereas activity in previous quarters was largely focused on the state’s urban centers, increased leasing in the suburbs during the second quarter clearly demonstrates the far-reaching effectiveness of these incentives.” Avison Young’s report notes that, in a state from which residents and businesses were emigrating at steep rates in previous years, New Jersey has been particularly effec- tive in retaining jobs through its incentives program. While the highest incentive bonuses are granted under the law to urban centers and transit hubs, businesses targeted nearby suburban areas during the quarter, seeking to capitalize on the more than $4 billion in tax credits approved by the New Jersey Economic De- velopment Authority (EDA) since 2010. According to Avison Young, the office vacancy rate in New Jersey increased slightly to 21.3% since the first quarter of 2014 as corporate consolida- tions and vacated space nar- rowly outpaced leasing activity. Despite the minor increase in vacancy, demand for high- quality office space remained strong, nudging the average asking rent to $23.59 per s/f, a $1.01 increase year-over-year. “While businesses continued to reassess their space needs to fit within an evolvingworkforce and technological landscape, the Economic Opportunity Act has been effective in coun- teracting consolidations and increased vacancies,” said Mat- thew Dolly , Avison Young’s vice-president of Research in New Jersey. “Overall, the

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