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Real Estate Journal — Fall Preview — September 28 - October 11, 2018 — 15C
M id A tlantic
N ew J ersey B roker
By Jeffrey J. Garibaldi, The Garibaldi Group/CORFAC International The healthy growing pains of a market in transition
T
he Northern/Central New Jersey office mar- ket has seen a steady
product. Across the country, absorp- tion rates of class A office
plethora of office product, just not the office product that’s in demand. This is what plagues
sition themselves into more desirable office markets. This will be the story for the foreseeable future and certainly into 2019, as eco- nomic fortunes have made new construction a more feasible option. We expect suburban markets to draw developers and employers alike to take a chance on their municipality. Those words, “culture” and “community” will remain ma- jor branding keywords for proj- ects and towns. The successful markets will be the ones that offer an appealing mix of office, retail and residential options,
as our working and social lives become more intercon- nected. Boutique coworking operations, pop-up shops and amenities, along with lifestyle essentials such as daycare, healthy eating options, and fitness access, will be signs of life in markets of promise. But above all else, it will be markets that attract develop- ers to create the office space of tomorrow that will stand to benefit the most. Jeffrey J. Garibaldi is president of The Garibaldi Group/CORFAC Interna- tional.
yet under - w h e l m i n g r e c o v e r y , a n d wh e n c o m p a r e d to numbers alone on a national lev- el, the situ- ation can be
“Culture” and “community” will remainmajor branding keywords for projects and towns. The successful markets will be the ones that offer an appealing mix of office, retail and residential options.”
Jeffrey Garibaldi
downright concerning. When you look beyond the big pic- ture, however, and focus in on the details, you can see that it’s actually a healthy example of a labor-driven market in transition. With the New Jersey unem- ployment rate at 4.5 percent and the national rate just below 4 percent at midyear, a huge part of the economic story today revolves around a tight labor market. This is a positive disruption as it makes labor a driving force behind a lot of business decisions. The labor market is not accepting just any work environment, which is creating the ‘haves’ and the ‘have-nots’ in our market. In the Northern/Central New Jersey market, success stories are emerging from urban areas like Jersey City and Newark, both experienc- ing huge momentum from population growth, declining vacancy rates and new con- struction. These two are the obvious choice for workers and employers migrating from New York City toward cheaper rents while both cities have po- sitioned themselves to absorb the increased activity. A more surprising success story is that of suburban mar- kets further west and south of New York City. Towns like Montclair, Morristown, Red Bank and Asbury Park are capitalizing on their own ame- nities and their unique at- mospheres. Dig further into Jersey and you discover small towns along the transit line like Summit and Ridgewood positioning themselves as live- work-and-play options. These secondary markets will become even more rel- evant as the aging (yup, I said it) millennial generation continues its long-awaited suburban migration. Today, these markets still face chal- lenges such as parking and transportation issues, but the number one issue is an insuf- ficient supply of class A office
buildings are outpacing class B by nearly double, especially in suburban markets. This is the transition that the New Jersey market faces: There is a
the market’s analytics. On the plus side, it provides great incentive for landlords to step up and compete to help these areas around the state tran-
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