CresaPartners Releases Third Quarter Northern N J Tenant Office Market Report
By Mel Fabrikant Wednesday, November 05, 2008, 01:50 PM EST
-- Indicators Point to Challenges for Landlords and Opportunities for Tenants --
CresaPartners recently completed its third quarter market analysis of the northern New Jersey tenant office sector. According to research prepared by Robert D. Rencarge, senior advisor of CresaPartners' Paramus office, just as the third quarter came to a close, the economic climate exhibited its most dramatic downturn in many years.
The region's commercial real estate market continued to feel the gradual effects of a slowing economy. Specifically, the office market in New Jersey experienced a decline in leasing activity, which is anticipated to continue for the next several quarters. Overall the market trends that are evolving include: tenant leasing costs decreasing, changes in financial markets having a negative impact on the office market, and landlords finding it difficult to finance cash concessions tenants demand. According to CresaPartners, these indicators prove that the tenant is 'moving into the drivers seat'.
At the close of the third quarter, while Class A office buildings in northern New Jersey experienced a slight increase in vacant space, Class B remained flat. Statistics indicated that new Class B leases hit the lowest quarterly figure in ten years. In the third quarter of 2008, the northern New Jersey marketplace was producing an average rental rate of $28.49 per square foot for Class A office space, which was up from $28.22 per foot obtained in the second quarter. Class B office space obtained an average asking rent of $22.85 per square foot in the third quarter, slightly higher than the $22.77 per square foot received in the second quarter.
Major transactions completed in the third quarter of 2008 in northern New Jersey include:
* Korea Express, a global logistics company, leased 225,000 SF of industrial space in South Brunswick.
* Reckitt Benckiser, manufacturer of household cleaning products, leased 163,000 SF of office space in Parsippany.
* HSBC, one of the country's top financial organizations, leased 110,000 SF of office space in Bridgewater.
* Arch Insurance, a property, casualty & specialty insurance provider, leased 107,000 SF of office space Jersey City.
* Topcon, an optical systems company, leased 85,000 SF of office/flex space in Oakland.
* Forest Labs, pharmaceutical company, leased 35,000 SF of office space in Jersey City.
* Curtiss Wright, an engineering technology company, leased 30,000 square feet of office space in Parsippany.
* Ralcorp Holdings, producer of private label store brand food products, leased 28,000 SF of office space in Parsippany.
* JBA Associates, automobile insurance providers, leased 27,000 SF of office space in Saddle Brook.
"We have never experienced as dramatic a crisis in the credit markets as we are at present," stated Rencarge. "The effects of the recent erratic financial markets, even after the government's help, will be felt for some time in all market sectors. The combined finance, insurance, and real estate ("FIRE") sector is estimated to occupy nearly 25 percent of the region's office space and we expect to see further weakening into several quarters."
On the up side, CresaPartners' third quarter reports indicate that from the tenant's perspective opportunities abound for lease negotiations. These tenant opportunities include generous rental abatements and construction funding that comes with long-term leases, and concessions that may offset low cost recovery for currently leased facilities. According to Rencarge, tenants with three years or less remaining on leases should explore the market and consider strategic alternatives that make financial sense.
About CresaPartners
CresaPartners is an international corporate real estate advisory firm that exclusively represents tenants and specializes in the delivery of fully integrated real estate services, including: Transaction Management, Project Management, Relocation Planning and Management, Strategic Planning, Site Selection and Incentives, Subleases and Dispositions, Lease Administration, Capital Markets, and Facilities Consulting. With more than 50 North American offices, CresaPartners is the largest pure tenant representation firm in the U.S. and Canada. Through a partnership with Atisreal international real estate group, CresaPartners is a member of one of the leading real estate organizations in the world, covering 35 countries. For more information, visit www.cresapartners.com.
CresaPartners recently completed its third quarter market analysis of the northern New Jersey tenant office sector. According to research prepared by Robert D. Rencarge, senior advisor of CresaPartners' Paramus office, just as the third quarter came to a close, the economic climate exhibited its most dramatic downturn in many years.
The region's commercial real estate market continued to feel the gradual effects of a slowing economy. Specifically, the office market in New Jersey experienced a decline in leasing activity, which is anticipated to continue for the next several quarters. Overall the market trends that are evolving include: tenant leasing costs decreasing, changes in financial markets having a negative impact on the office market, and landlords finding it difficult to finance cash concessions tenants demand. According to CresaPartners, these indicators prove that the tenant is 'moving into the drivers seat'.
At the close of the third quarter, while Class A office buildings in northern New Jersey experienced a slight increase in vacant space, Class B remained flat. Statistics indicated that new Class B leases hit the lowest quarterly figure in ten years. In the third quarter of 2008, the northern New Jersey marketplace was producing an average rental rate of $28.49 per square foot for Class A office space, which was up from $28.22 per foot obtained in the second quarter. Class B office space obtained an average asking rent of $22.85 per square foot in the third quarter, slightly higher than the $22.77 per square foot received in the second quarter.
Major transactions completed in the third quarter of 2008 in northern New Jersey include:
* Korea Express, a global logistics company, leased 225,000 SF of industrial space in South Brunswick.
* Reckitt Benckiser, manufacturer of household cleaning products, leased 163,000 SF of office space in Parsippany.
* HSBC, one of the country's top financial organizations, leased 110,000 SF of office space in Bridgewater.
* Arch Insurance, a property, casualty & specialty insurance provider, leased 107,000 SF of office space Jersey City.
* Topcon, an optical systems company, leased 85,000 SF of office/flex space in Oakland.
* Forest Labs, pharmaceutical company, leased 35,000 SF of office space in Jersey City.
* Curtiss Wright, an engineering technology company, leased 30,000 square feet of office space in Parsippany.
* Ralcorp Holdings, producer of private label store brand food products, leased 28,000 SF of office space in Parsippany.
* JBA Associates, automobile insurance providers, leased 27,000 SF of office space in Saddle Brook.
"We have never experienced as dramatic a crisis in the credit markets as we are at present," stated Rencarge. "The effects of the recent erratic financial markets, even after the government's help, will be felt for some time in all market sectors. The combined finance, insurance, and real estate ("FIRE") sector is estimated to occupy nearly 25 percent of the region's office space and we expect to see further weakening into several quarters."
On the up side, CresaPartners' third quarter reports indicate that from the tenant's perspective opportunities abound for lease negotiations. These tenant opportunities include generous rental abatements and construction funding that comes with long-term leases, and concessions that may offset low cost recovery for currently leased facilities. According to Rencarge, tenants with three years or less remaining on leases should explore the market and consider strategic alternatives that make financial sense.
About CresaPartners
CresaPartners is an international corporate real estate advisory firm that exclusively represents tenants and specializes in the delivery of fully integrated real estate services, including: Transaction Management, Project Management, Relocation Planning and Management, Strategic Planning, Site Selection and Incentives, Subleases and Dispositions, Lease Administration, Capital Markets, and Facilities Consulting. With more than 50 North American offices, CresaPartners is the largest pure tenant representation firm in the U.S. and Canada. Through a partnership with Atisreal international real estate group, CresaPartners is a member of one of the leading real estate organizations in the world, covering 35 countries. For more information, visit www.cresapartners.com.
