Real Estate Journal — Spring Preview — April 24 - May 14, 2015 — 17A

M id A tlantic

O ffice M arket

By Matt McDonough, Transwestern Urgency in the market: Competition heats up for quality office space


alendar year 2014 hosted the first sense of urgency that the Mor-

other landlords to upgrade and improve buildings. As an ex- ample, Normandy Real Estate Partners has started a multi- million dollar capital improve- ment program at their building at 200 Park Avenue, Florham Park, which will include a com- plete renovation of the main lobby, food service, conference center, exercise facility and locker rooms. Normandy will be able to offer a stand-alone, 160,000 s/f, headquarters- quality facility. Such anecdotes bear them- selves out in the hard num- bers. Over the past year, the

a new 200,000 s/f, build-to- suit facility, while insurance firm Arthur J. Gallagher &

and PricewaterhouseCoopers’ renewal and expansion of 182,000 s/f on Campus Drive in Florham Park. As prospective tenants real- ize that they have competi- tion for quality space, the lease process will gain some urgency and these absorp- tion numbers will continue to increase. Matt McDonough serves as the managing director in Transwestern’s New Jersey office, providing both tenant representation and landlord disposition services. n

Parsippany region has hosted 640,000 s/f of absorption, the most of any market in the

ris County, New Jersey office market has experi- enced since 2007. For the first time in over seven years, it paid for a prospec- tive tenant to

“As statewide jobs began to pick up in 2014, Morris County enjoyed a flight to quality movement, as tenants abandoned older facilities in favor of newly renovated, more efficient buildings.”

Co. made a 51,000 s/f commit- ment to move fromShort Hills. The Morristown submarket experienced the state’s second highest absorption with a posi- tive number of 624,000 s/f over the past 12 months, including Summit Medical’s 100,000 s/f build-to-suit on Park Avenue,

state. Securitas signed for 81,000 s/f in Parsippany; FM Global committed to 55,000 s/f; and a large engineering firm committed to moving 350 jobs from Bergen County to a new 71,000 s/f space. Additionally, in Whippany, a large insur- ance company is considering

Matt McDonough

step up earlier as opposed to later. From the collapse of the market with the onset of the Great Recession in 2008 until well into 2014, the lon- ger a tenant waited to make a leasing decision, the better deal they were able to realize. With depressed demand and abundant available space, a prospective tenant faced little, if any, competition for a va- cant space. Prices declined as time wore on, and short-term renewals, stopgap measures and delayed decisions became the rule of the day. As statewide jobs began to pick up in 2014, Morris County enjoyed a flight to quality movement, as tenants abandoned older facilities in favor of newly renovated, more efficient buildings. Transwest- ern’s newly renovated project at 300 Kimball saw several large transactions come to- gether rapidly. After leasing an 80,000 s/f floor to a publicly held data processing firm, we had to “bump” a prospective 80,000 s/f insurance company from one floor to another to make way for a 170,000 s/f pharmaceutical firm. When the firmwas delayed, a nation- al company moved deliberately to commit to one of the vacant floors. Preferring a “Bird in the Hand,” Transwestern signed the new lease, unfortunately precluding the pharmaceuti- cal firm. For the first time in years, we witnessed a situation where there were more prospective tenants than available com- petitive space. Although the “Bird in the Hand” left us with a remaining floor, we were able to increase rents with each suc- cessive lease, and are currently entertaining several prospects to lease the remaining space at even higher rents. The sense of urgency created by tenants getting bumped rippled out as those tenants begin to realize that good space will not wait. Such success encouraged

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