Office Market Snapshot
Central New Jersey • Third Quarter • 2013
Market Tracker
*Arrows = Current Qtr Trend
Vacancy
14.6%
Net Absorption
467,333 SF
Deliveries
0 SF
Asking Rent
$23.65 SF
Lowest Vacancy Rate In Over Four Years
The Central New Jersey office market appears to be operating on all cylinders, as the
vacancy rate dropped to its lowest level in 18 quarters, down 50 basis points from last quarter
to 14.6 percent. An increase in leasing activity this year led to another 467,333 square feet of
positive absorption in the third quarter. This brought the year-to-date total north of 1.1 million
square feet of positive absorption, as tenant demand outpaced space returns during all three
quarters in 2013. Class A space accounts for all of the positive absorption, as Class B space
has posted negative 36,914 square feet of absorption. Five out of the seven submarkets
posted decreases in the vacancy rate this quarter, as Monmouth County recorded a 160
basis point drop to 14.1 percent. Average asking rents remained relatively stable in the third
quarter, with the biggest change occurring in the I-78 West submarket, which posted a $1.60
per square foot jump in rents to $18.44.
CENTRAL NEW JERSEY OFFICE
Economic Indicators
Q3 13
Q3 12
1.257M
1.255M
Central NJ**
Unemployment
7.9%
9.5%
U.S.
Unemployment
7.2%
8.8%
80.83
75.11
Central NJ*
Employment
(Seasonally Adjusted)
U.S. CCI
(Quarterly Avg.)
*Edison-New Brunswick/Trenton-Ewing (NJ BLS)
**Hunterdon, Mercer, Middlesex, Monmouth,
Ocean & Somerset Counties (NJ BLS)
Net Absorption
Square Feet ('000s)
1,600
1,100
600
100
-400
-900
-1,400
2008 2009 2010 2011 2012 2013
Vacancy Rates
16%
Historical Average
The momentum gained in the office market can be directly correlated with job growth over
the past year. The New Jersey unemployment rate continued its downward trend and
dropped to 8.5 percent in August, the lowest level since March 2009. The Central New
Jersey area has outperformed the state as the unemployment rate dropped to 7.9 percent in
August. In addition, the labor market continues to grow as the State of New Jersey gained
64,700 jobs year-over-year through August 2013. In the Central New Jersey area, trade,
transportation and utilities was the leading industry sector for employment gains, with 6,700
jobs added for the trailing 12-month period through August 2013. During this same time
period, the other biggest gainers were leisure and hospitality, adding 6,300 employees;
education and health services, adding 5,200 jobs; and financial services, gaining 3,100 jobs.
Leasing activity remained robust in the third quarter with numerous high profile transactions
announced. Two of the largest transactions of the quarter were renewals as AT&T renewed
275,000 square feet at 30 Knightsbridge Road in Piscataway and URS Corporation renewed
234,160 square feet at 510 Carnegie Center in Princeton. Another notable significant
transaction from the third quarter was Johnson & Johnson’s two-year extension for 112,184
square feet at 23 Orchard Road. The Woodbridge/Edison submarket had a rush of leasing
activity for mid-sized firms, as two notable leases were signed. Real Estate Mortgage
Networks leased 50,258 square feet at 194 Wood Avenue South for 10 years. At 270
Davidson Avenue, J. Knipper & Co., Inc., a healthcare company, leased 45,352 square feet.
In addition, the law firm of Hill Wallack, LLP leased 43,500 square feet at 19 Roszel Road in
Princeton.
Investment activity was solid in the third quarter as another $207.5 million in volume was
traded. This brought the year-to-date office investment activity to $658.5 million, for an
average price per square foot of $122. The most notable investment this quarter was the
purchase of three buildings in the Merrill Lynch Hopewell Campus by American Real Estate
Partners for $90 million, or $239 per square foot.
Forecast
14%
• Expect the Central New Jersey market to end 2013 on a high note as leasing activity remains at a
recent high
12%
• The healthcare industry has recorded the largest gains in employment since 2009, which will continue
to create demand for medical office space
10%
2008 2009 2010 2011 2012 2013
• Concession packages offered have stabilized, and will likely tighten in 2014
www.cassidyturley.com
Cassidy Turley Office Market Snapshot
Central New Jersey • Third Quarter • 2013
TOTAL
BLDGS
INVENTORY
SUBLET
VACANT
TOTAL
VACANT
VACANCY
RATE
CURRENT NET
ABSORPTION
YTD NET
ABSORPTION
Brunswick/Piscataway/I-287
275
18,418,948
243,433
3,910,135
21.2%
151,956
168,765
$21.23
I-78 West
63
2,445,900
0
507,982
20.8%
(15,130)
60,196
$18.44
Monmouth County
389
15,547,761
48,574
2,196,652
14.1%
247,948
310,089
Ocean County
135
3,766,454
7,175
351,586
9.3%
(27,012)
12,481
UNDER
CONSTRUCTION
AVERAGE
ASKING RATE
Featured Submarkets
20,525
$22.18
$21.94
145,274
$25.55
Princeton Area
517
34,901,849
214,234
4,237,397
12.1%
29,868
411,164
Somerset/I-78
205
22,793,375
209,935
2,835,525
12.4%
119,370
161,440
$24.05
Woodbridge/Edison
120
9,378,430
45,496
1,636,824
17.5%
62,120
132,653
$25.80
Class A
414
60,190,455
432,479
9,008,711
15.0%
569,640
1,143,566
145,274
$26.07
Class B
1,256
44,130,682
321,872
6,218,675
14.1%
(102,307)
(36,914)
20,525
$20.54
CENTRAL NJ TOTAL
1,670
104,321,137
754,351
15,227,386
14.6%
467,333
1,106,652
165,799
$23.65
Central NJ Market Totals
* Market statistics may vary from previous quarter as submarkets were reevaluated and updated for accuracy
Office Submarkets
Central New Jersey
Key Lease Transactions Q3 13
PROPERTY
SIZE (SF)
TENANT
TRANSACTION
TYPE
SUBMARKET
30 Knightsbridge Road
275,000
AT&T
Renewal
Brunswick/Piscataway/
I-287
23 Orchard Road
112,184
Johnson & Johnson
Extension
Princeton Area
194 Wood Avenue South
50,258
Real Estate Mortgage
Networks
Direct
Woodbridge/Edison
270 Davidson Avenue
45,352
J. Knipper & Co. Inc.
Direct
Woodbridge/Edison
19 Roszel Road
43,500
Hill Wallack, LLP
Direct
Princeton Area
184 Liberty Corner Road
40,394
Fiserv International
Solutions
Direct
Somerset/I-78
Key Sales Transactions Q3 13
PROPERTY
SIZE (SF)
SELLER/BUYER
PRICE
SUBMARKET
1200 Merrill Lynch Drive
380,417
FIG LLC/American Real Estate
Partners Management, LLC.
$90,815,000
Princeton Area
30 Independence Boulevard
210,560
Beacon Capital Partners/
Griffin Capital Essential Asset
$40,000,000
Somerset/I-78
106 Allen Road
133,684
Mack-Cali Realty Corporation/
The Silverman Group
$18,000,00
Somerset/I-78
1.
2.
3.
4.
5.
6.
7.
Brunswick / Piscataway / I-287
I-78 West
Monmouth County
Ocean County
Princeton Area
Somerset / I-78
Woodbridge / Edison
Raymond P. Trevisan
Managing Principal
Liliya Magid
Research Analyst
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The information contained within this
report is gathered from multiple sources
considered to be reliable. The information
may contain errors or omissions and is
presented without any warranty or
representations as to its accuracy.
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