10C — July 26 - August 15, 2013 — Brokerage Directory — Mid Atlantic Real Estate Journal
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Avison Young releases Q2 office report Life science and healthcare sectors are prescription for keeping NJ office market healthy office vacancy rate since the third quarter of 2011.
M
orristown, NJ — The second quar- ter of 2013 revealed
• Central New Jersey, where Memorial Sloan-Ket- tering acquired a former 287,000 s/f Lucent Technolo- gies facility in Middletown to convert the property from an office building into a hospital, cancer treatment center and data center; and • Northern New Jersey, where Spectra Laboratories renewed its lease and ex- panded from 107,000 sf to 191,000 sf, with plans to ret- rofit its headquarters facility in Rockleigh. “New Jersey’s healthcare industry is the fastest grow-
ing market sector in the state, adding 171,100 new jobs from 1990 through 2011, while all other private sector employment has had a net increase of only 6,800 jobs,” comments Jeffrey Heller, Avison Young principal and managing director of the firm’s New Jersey office. “The ongoing growth by these two sectors is helping to fuel office market activity and strength- en conditions, particularly in central New Jersey where the presence of life science com- panies is so prominent.” The life sciences industry
in New Jersey is home to more than 350 biotechnol- ogy companies and 17 of the 20 largest pharmaceutical companies, employs 121,000 people, and contributes more than $58 billion to the state economy. “It is our belief that the healthcare industry will con- tinue to be a robust market as a result of New Jersey’s and the overall country’s growing aging population,” notes Matthew Dolly, Avison Young’s VP of Research in New Jersey. “According to the U.S. Census, baby boomers make up the largest increase of all age groups, providing the foundation for a contin- ued and increasing demand for healthcare and life sci- ence services and products. This will have a subsequent, positive impact on the New Jersey office market.” Heller adds: “At Avison Young, we have seen the de- mand for assets appropriate for medical use rise. In fact, we have recently been work- ing with numerous clients in this space, including urgent care groups, dialysis cen- ters, dental groups, radiology groups and sports medicine groups that appreciate our ability to truly understand their needs and identify the space solutions that will help optimize their business.” According to Avison Young, the New Jersey office mar- ket experienced positive net absorption of 676,000 sf dur- ing the second quarter of 2013, which contributed to a slight decrease in the overall vacancy rate to 21% at the mid-year point from 21.4% the previous quarter. Average asking rents also responded to the slowly improving mar- ket conditions, increasing to $22.58 per square foot (psf) – the largest upturn since the first quarter of 2011. Northern New Jersey Avison Young reports that 22.5% of office inventory in northern New Jersey re- mained vacant at the close of the second quarter, compared with 22.2% during the previ- ous quarter and 21.2% a year ago. The negative absorption allowed for little fluctuation on average asking rents, which increased slightly to $22.88 psf from $22.84 psf at the end of the first quarter. n
These are some of the key trends noted in Avison Young’s second quarter 2013 New Jersey office market analysis, released today. Second-quarter activitywas driven by the redevelopment of aging office complexes to accommodate the needs of healthcare and life sciences firms, either through retro- fitting them for higher and better use or modernizing the existing infrastructure. Prime examples are located in:
that the New Jersey office market is being resuscitated through the combined im- pact of the life science and healthcare industries. Five of the top six lease transac- tions that contributed to of- fice space absorption during the second quarter were by these sectors, reinvigorating New Jersey’s reputation as the “Medicine Chest” of the United States and helping to bring about the largest de- crease in New Jersey’s overall
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