New Jersey CRE market struggles with growth

The office market in New Jersey may experience continued slow growth.

Property management companies in New Jersey may be dealing with some difficult market conditions, especially in the industrial and office markets. Despite this, some slow growth is expected in the market this year.

The economic situation in the Garden State has hurt many aspects of business, as there has not been significant job growth, a report from Cushman & Wakefield explained. This affected growth for many office properties, especially on the corporate side of the state.

"New Jersey's economic recovery remained lackluster in 2012," said Gualberto Medina, executive managing director of Cushman & Wakefield. "For example, while the unemployment rate edged downward in the fourth quarter, it was still at 9.6 percent, well above the national average of 7.7 percent."

There was some improvement in the industrial and office markets during the fourth quarter. Specifically, the office market experienced an improvement of more than 44 percent from the third quarter, the report explained. Despite the significant gain to end the year, the full figure for 2012 was more than 32 percent less than 2011's performance.

Office vacancies in the northern part of the state rose higher than 18 percent last year, the report noted. This was partly due to a lack of leasing activity in the area. Investment during the fourth quarter in the area was more than 2 million square feet less than in 2011.

The industrial market had some positives, despite a lack of manufacturing power during the year, the report said. There was still an improved level of retail sales, and this helped improve many aspects of this sector compared to 2011. Even still, the level of leasing activity fell more than 24 percent in Central and Northern New Jersey, as it was less than 18 millions square feet.

New Jersey apartment market continues boom
There may be issues in both the office and industrial sectors in the Garden State this year, but this is not the case for the multifamily market.

There was a gain of more than 50 percent in the level of apartment building permits last year, according to, citing figures from Jeffrey Otteau, president of Otteau Valuation Group. This rate was significantly faster than the single-family home permit rate increase, which was just 15 percent. Additionally, rents should improve by as much as 5 percent this year.

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