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8A — September 26 - October 9, 2014 — Fall Preview — M id A tlantic
Real Estate Journal
NJ C ommercial R eal E state M arket By Matt McDonough, Transwestern New Jersey The Return of the Morristown/ Parsippany office market
A
new urgency has man- ifested itself as signifi- cant positive absorp-
the first half of 2014 alone. An anemic recovery from the 2008-2009 financial col- lapse sputtered through 2010, but due to the uncertainty in Washington and weak- ness in Europe, came to an abrupt halt in the summer of 2011. Demand remained non-existent through 2012 and into the summer of 2014. Spaces languished on the market. The longer a tenant waited, the better the deal he was able to negotiate. Aver- age vacancy periods stretched from 9 to 10 months to 14 to 18 months. Each prospect
conducted multiple site visits and seemingly endless techni- cal reviews. Lease negotia-
activity by a few big players and compounded by a lack of new or freshly renovated
In the fall of 2013, two large transactions by Merck started the dominoes falling. For the first time in years prospects negotiating for space were “bumped” by other prospects. After spending months negotiating on “their space,“ tenants suddenly found themselves scrambling for second choices. The closing of the Merck Headquarters in Whitehouse Station led a series of trans- actions in the Morristown/ Parsippany market. Merck Consumer Health took the IMS sublease of 120,000 s/f at 11 Waterview Blvd., allowing IMS to “right size” into 80,000 s/f at Interchange Park in Parsippany. Merck Animal Health also left Whitehouse Station and committed to a long term, net lease of 150,000 s/f of top shelf space from Maersk in the presti- gious Giralda Farms Center. That enabled Maersk, the Danish shipping company, to continue the decentralization of their U.S. headquarters operations, and consolidate into 70,000 s/f at 180 Park Ave., Florham Park. Suddenly, the mind set of “wait and see” shifted and the tenants throughout the market started stepping up. Fiserv and Factory Mutual quickly concluded negotia- tions and committed to 80,000 and 55,000 s/f respectively at 300 Kimball Dr. GAF Corporation purchased Cam- pus Drive to relocate their 377,000 s/f headquarters from Wayne to Parsippany. Sum- mit Financial and Drinker Biddle concluded renewal negotiations for 38,000 and 57,000 s/f respectively. The law firm Greenberg Traurig committed to a 60,000 s/f long-term lease on Campus Dr. in Florham Park. Smaller firms such as Schenk Price, Jackson Lewis, Pacira Phar- maceuticals, Alliant Technol- ogies, Insperity, Philadelphia Financial and U.S. Trust all stepped up for new leases or renewals in excess of 10,000 s/f. Although August has wit- nessed some of the usual slowdown of summer, sev- eral large transactions have kicked into gear as everyone returned in September. Matt McDonough serves as the managing director in Transwestern’s New Jersey office. n
tion in the Morristown/ Parsippany office mar- ket through the first half of 2014. Af- ter hosting negative ab- sorption of
“Although August has witnessed some of the usual slowdown of summer, several large transactions have kicked into gear as everyone returned in September.”
tions dragged on and became particularly acrimonious. There was no urgency in the market, and with no market forces pushing them, no deci- sions were made. Precipitated by a spurt of
space, there were suddenly too many tenants and too little truly top-quality space in the Morristown/ Parsip- pany market. In the game of musical chairs, the tempo was increasing.
Matt McDonough
1,160,000 s/f in 2012 and neg- ative absorption of 285,000 s/f in 2013 the market has seen a relatively healthy positive absorption of 700,000 s/f in
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