Northern New Jersey commercial real estate conditions slow in Q3

The commercial real estate situation in New Jersey slowed during the third quarter.

The commercial real estate situation in Northern New Jersey had little progress during the third quarter, as vacancies were largely unchanged year-over-year, and leasing declined markedly.

Property management companies in the Garden State experienced a leasing decline of approximately 28 percent during the third quarter from the same three months last year, according to a report from Cushman & Wakefield.

Some sections of the state experienced more significant leasing declines. Citing the report, The Bergen Record noted that Bergen County's leasing levels declined by more than 34 percent.during the third quarter compared to the same quarter in 2011. Additionally, in Passaic County, the level fell more than 50 percent.

"Leasing remains low even in northern New Jersey's traditionally active submarkets like the Hudson waterfront," said Gualberto Medina, executive managing director for Cushman & Wakefield's New Jersey operations. "As a result, occupancy is flat, and rents are experiencing downward pressure."

Vacancy rates remain stable
The state's vacancy rate also was barely changed from the third quarter of 2011, as it stood at slightly less than 18 percent, according to the report. Bergen and Passaic counties had rates of 18.5 and 19.6 percent, respectively. Some of the issues that contributed to the high vacancy rates was the lack of jobs – a theme throughout much of the United States.

The Garden State also experienced a heightened unemployment rate during the quarter than the national average. Medina noted that the state's unemployment rate was nearly 10 percent, as well as two percentage points higher than the national rate.

"Overall, there's not a lot of big activity in Bergen and Passaic county right now," Tom Reilly, managing director for Jones Lang LaSalle, told the newspaper. "We continue to see contraction in the state of New Jersey. … We continue to see corporate clients give back space. There's no significant growth. We think that's a trend that's not going to reverse anytime soon."

Jones Lang LaSalle added that the leasing situation in the state may have been affected by the increasing finished developments. The northern and central parts of the state experienced the most significant completed development levels. Of those, Bergen County had close to 540,000 square feet of new property space.

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