northern & central new jersey leasing .../media/files/united states...saddle river, nj and white...

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

10.5%

Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11

NJ U.S.

LEASING MARKETREPORT

NORTHERN & CENTRAL NEW JERSEY

WWW.COLLIERS.COM/MARKETS/PARSIPPANYPRINCETON

Q3 2011 | OFFICE

Diverging trends during the third quarter of 2011 created a dichotomy between the Northern and Central

New Jersey offi ce markets. While the overall availability rate increased during the quarter to 20.3%

from 19.9% in the northern region, the central New Jersey counties experienced an availability decrease

from 20.7% to 19.8%. A commitment to a 770,000 square foot former Merrill Lynch facility in Plainsboro

by pharmaceutical company Novo Nordisk was largely responsible for the decline in available space in

Central New Jersey. As a whole, the general mood seems to be unchanged and activity hasn’t increased

much. However, a few of the larger tenants that have been scouring the market for quite some time have

landed, statistically improving overall conditions. For the quarter, 20.1% of offi ce inventory remains

available, compared to 20.2% last quarter and 20.3% a year ago.

While some larger deals have been signed, there remains a number of large tenants in the market,

however, they do not represent incremental demand but more musical chairs. Incentive packages are

driving many of these larger tenants, specifi cally the Urban Transit Hub Tax Credit Program, which can

benefi t both landlords and tenants who relocate near rail stations in several urban municipalities.

Decisions continue to be fairly slow moving, especially when evaluating state incentive programs. In

addition, for tenants evaluating suburban locations, there is an abundance of older suburban offi ce

product, but not as many large blocks of Class A availabilities, forcing tenants to pursue build-to-suit

options, which can also extend their search time in the market and delay a transaction. As for smaller

tenants (10,000-50,000 SF), some returned to the market in September to evaluate their options. For

the most part, tenants are not making unforced moves, waiting until leases need to be renewed.

Private sector job

growth continues to

increase modestly; now

six consecutive months

through August 2011.

MARKET INDICATORS

Large Transactions Help Stabilize Offi ce Market

2Q11 3Q11

AVAILABILITY

NET ABSORPTION

CONSTRUCTION

RENTAL RATE

UNEMPLOYMENT RATES - NEW JERSEY VS. UNITED STATES

$20.00

$21.00

$22.00

$23.00

$24.00

$25.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

continued on page 6

NEW JERSEY OVERALL Availability Rate vs. Average Asking Rent

NORTHERN NEW JERSEY

Two large offi ce leases resulting in new

construction and a large offi ce renewal

spearheaded activity in Northern New Jersey

during 3Q11. After several months of consideration,

Pearson Education has made a commitment to

relocate a combined 1,300 jobs from its Upper

Saddle River, NJ and White Plains, NY locations

to Hoboken, NJ and New York City. The New

Jersey portion of the deal includes an $82.5

million Urban Transit Hub Tax Credit, moving 700

jobs in 2014 while committing to 210,000 square

feet in a new offi ce building to be built on River

Street in Hoboken while leaving vacant a 471,000

square foot building in Upper Saddle River.

A new 203,000 square foot offi ce building is

being built for Wyndham Worldwide by Mack-Cali

Realty at its Business Campus in Parsippany. The

new construction is adjacent to Wyndham’s

corporate headquarters, built in 2009 as the fi rst

phase of the project. Also in Parsippany, Deutsche

Bank signed the largest renewal during 3Q11, as

the global fi nancial services company committed

to 204,515 square feet for seven more years at 2

Gatehall Drive in Parsippany.

Despite the aforementioned transactions which

account for more than 600,000 square feet of

leasing activity, the Northern New Jersey offi ce

market experienced a quarterly uptick in

availability, to 20.3% from 19.9% during 2Q11.

Total availability rate is measured by existing

inventory, meaning new construction does not

factor into the overall rate, as the space has never

been “on the market”. Furthermore, in the case of

Pearson, more space will actually be vacated in

New Jersey than leased. As for Wyndham, a fully-

leased 203,000 square foot building will be added

to the market, eff ectively lowering the overall

availability. Much of the other leasing activity

during 3Q11 consisted of smaller tenants, having

little impact on absorption. Average asking rents

for 3Q11 were virtually unchanged for the quarter

averaging $22.40 per square foot gross, plus

tenant electric, compared to $22.42 the previous

quarter and $22.78 at the same time last year.

Availability Rate:

20.3%

Vacancy Rate:

15.1%

Average Asking Rent

$22.40 + Tenant Electric

ESSEXMORRIS

BERGEN

PASSAIC

HUDSON

After several months of consideration,

Pearson Education has made a

commitment to relocate a combined

1,300 jobs from its Upper Saddle River,

NJ and White Plains, NY locations to

Hoboken, NJ and New York City.

County

Total

Availability

Total

Vacancy

Average

Asking Rent

Bergen 19.8% 15.5% $24.23

Essex 18.5% 14.8% $22.31

Hudson 13.0% 9.8% $23.52

Morris 27.8% 19.1% $20.48

Passaic 20.8% 15.3% $22.51

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT | Q3 2011 | OFFICE | NORTHERN & CENTRAL NEW JERSEY

NORTHERN NEW JERSEY

NORTHERN NEW JERSEY

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

0%

5%

10%

15%

20%

3Q10 4Q10 1Q11 2Q11 3Q11

$21.00

$22.00

$23.00

$24.00

$25.00

$26.00

0%

5%

10%

15%

20%

3Q10 4Q10 1Q11 2Q11 3Q11

$18.00

$19.00

$20.00

$21.00

$22.00

$23.00

0%

5%

10%

15%

20%

25%

30%

35%

3Q10 4Q10 1Q11 2Q11 3Q11

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11


COLLIERS INTERNATIONAL | P. 3

BERGEN COUNTY Availability Rate vs. Average Asking Rent

ESSEX COUNTY Availability Rate vs. Average Asking Rent

HUDSON COUNTY Availability Rate vs. Average Asking Rent

MORRIS COUNTY Availability Rate vs. Average Asking Rent

PASSAIC COUNTY Availability Rate vs. Average Asking Rent

$22.00

$23.00

$24.00

$25.00

$26.00

$27.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

RECENT TRANSACTIONS

TENANT ADDRESS CITY COUNTY SQ. FT.

Pearson Inc. 221 River Street Hoboken Hudson 210,052

Deutsche Bank 2 Gatehall Drive Parsippany Morris 204,515

Wyndham Worldwide Sylvan Drive Parsippany Morris 203,000

Ameriprise Financial, Inc. 100 Campus Drive Florham Park Morris 44,000

Hartford Fire Insurance Co. 100 Campus Drive Florham Park Morris 31,075

Agfa Corporation 611 River Drive Elmwood Park Bergen 22,905

Hay Group Holdings, Inc. 34 Exchange Place Jersey City Hudson 18,786

Pinnacle Foods Group LLC 399 Jeff erson Road Parsippany Morris 11,000

North Jersey Spine Group 1680 Route 23 N Wayne Passaic 10,243

Caremark, LLC 180 Passaic Avenue Fairfi eld Essex 7,736

Sanyo Semiconductor U.S.A. LLC 250 Pehle Avenue Saddlebrook Bergen 6,936

Adams, Stern Gudierrez 1 Riverfront Plaza Newark Essex 6,000

Pacifi c Group Holdings 60 Park Place Newark Essex 5,000

Jewish Family Service 925 Allwood Road Clifton Passaic 4,860

The SPI Group 165 Passaic Avenue Fairfi eld Essex 4,000

Scordilis Chiropractic 925 Allwood Road Clifton Passaic 3,900

TuitionBids.com 180 Sylvan Avenue Englewood Cliff s Bergen 3,642

RTP 95 Route 17S Paramus Bergen 3,525

Sordoni Construction 409 Main Street Chester Morris 3,500

Continuum Health Alliance, LLC 160 Littleton Road Parsippany Morris 2,981

$20.00

$21.00

$22.00

$23.00

$24.00

$25.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

NORTHERN NEW JERSEY Availability Rate vs. Average Asking Rent

CENTRAL NEW JERSEY

After positive absorption for the third consecutive

quarter, the availability rate in Central New Jersey

is at its lowest level in nearly two years. As of

3Q11, 19.8% of offi ce space is on the market,

almost a full point lower than the previous quarter

of 20.7% and very favorable compared to its rate

of 21.1% a year ago. Activity in the Princeton

submarket and along the Route 78 Corridor,

driven primarily by life science/pharmaceutical

companies, assisted in keeping positive

momentum in Central New Jersey. Asking rents

were lower for the quarter, but still higher when

compared year-over-year, averaging $22.19 per

square foot gross, plus tenant electric, compared

to $22.31 and $21.63, respectively.

More than one million square feet of space was

absorbed during the quarter. Danish

pharmaceutical fi rm Novo Nordisk led activity,

agreeing to redevelop a 770,000 square foot

former Merrill Lynch headquarters at 800

Scudders Mill Road in Plainsboro. Unlike some of

the other large deals that have taken place in the

market this year, this represents an expansion

and Novo Nordisk has committed to a 15-year

lease, initially planning to occupy 500,000 square

feet. Also in the life science sector, LifeCell

Corporation leased 117,937 square feet along the

Route 78 Corridor in Bridgewater and CoreLab

Partners, Inc., a medical imaging and cardiac

safety provider, leased 58,801 square feet in

Princeton. Additionally, Qualcomm Flarion

Technologies agreed to renew its lease for

125,742 square feet at Somerset Corporate

Center in Bridgewater.

Tenants leasing less than 40,000 square feet

represented much of the remaining activity in

Central New Jersey during 3Q11. Going forward,

the market should continue to benefi t from the

business-friendly administration in Trenton,

bolstered by Governor Christie’s announcement

that he will not run for President. For example,

Church and Dwight has agreed to stay in New

Jersey in a new development in Ewing and keep

+/-500 employees here, helped by the state’s

business retention program.

Availability Rate:

19.8%

Vacancy Rate:

16.3%

Average Asking Rent

$22.19 + Tenant Electric

SOMERSET

UNION

MIDDLESEXMERCER MONMOUTH

Activity in the Princeton submarket

and along the Route 78 Corridor, with

life science/pharmaceutical companies

having the greatest impact, assisted in

keeping positive momentum in Central

New Jersey.



CENTRAL NEW JERSEY

County

Total

Availability

Total

Vacancy

Average

Asking Rent

Mercer 15.9% 14.7% $25.42

Middlesex 23.3% 21.2% $21.54

Monmouth 20.2% 13.6% $22.22

Somerset 24.2% 16.4% $20.97

Union 9.1% 10.2% $23.65

$23.00

$24.00

$25.00

$26.00

$27.00

$28.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

CENTRAL NEW JERSEY

$18.00

$19.00

$20.00

$21.00

$22.00

$23.00

0%

5%

10%

15%

20%

25%

30%

35%

3Q10 4Q10 1Q11 2Q11 3Q11

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

0%

5%

10%

15%

20%

25%

30%

3Q10 4Q10 1Q11 2Q11 3Q11

$20.00

$21.00

$22.00

$23.00

$24.00

$25.00

0%

5%

10%

15%

20%

3Q10 4Q10 1Q11 2Q11 3Q11


COLLIERS INTERNATIONAL | P. 5

MERCER COUNTY Availability Rate vs. Average Asking Rent

MIDDLESEX COUNTY Availability Rate vs. Average Asking Rent

MONMOUTH COUNTY Availability Rate vs. Average Asking Rent

SOMERSET COUNTY Availability Rate vs. Average Asking Rent

UNION COUNTY Availability Rate vs. Average Asking Rent

RECENT TRANSACTIONS

TENANT ADDRESS CITY COUNTY SQ. FT.

Novo Nordisk 800 Scudders Mill Road Plainsboro Middlesex 770,000

Qualcomm Flarion Technologies 500 Somerset Corporate Boulevard Bridgewater Somerset 125,742

LifeCell Corporation 95 Corporate Drive Bridgewater Somerset 117,937

CoreLab Partners, Inc. 100 Overlook Center Princeton Mercer 58,807

Investors Savings 101 Wood Avenue S0 Woodbridge Middlesex 40,000

Birdsall Services Group 65 Jackson Drive Cranford Union 28,763

Wells Fargo Advisors, LLC 331 Newman Springs Road Red Bank Monmouth 22,207

NJPLIGA 222 Mount Airy Road Basking Ridge Somerset 20,673

BNP Paribas 485 Route 1 S Iselin Middlesex 18,928

GalaxE.Solutions 2 Executive Drive Somerset Somerset 16,474

Landmark Education 40 Cragwood Road South Plainfi eld Middlesex 13,375

Dataram Corporation 186 Princeton Hightstown Road West Windsor Mercer 11,056

Celsion Corporation 997 Lenox Drive Lawrenceville Mercer 10,870

Amarin Pharmaceuticals 1430 Route 206 Bedminster Somerset 9,747

Keller Williams Realty 184 Elm Street Westfi eld Union 8,400

Agile Communications 804 Broadway West Long Branch Monmouth 8,000

Advanced Therapy of America 485 Route 1 S Iselin Middlesex 6,853

The Alliance 80 Cottontail Lane Somerset Somerset 6,346

EPCOS, Inc. 485 Route 1 S Iselin Middlesex 4,500

Desapio Properties 380 Foothill Road Bridgewater Somerset 4,320

$19.00

$20.00

$21.00

$22.00

$23.00

$24.00

0%

5%

10%

15%

20%

25%

3Q10 4Q10 1Q11 2Q11 3Q11

CENTRAL NEW JERSEY Availability Rate vs. Average Asking Rent

ROBERT MARTIE

Executive Vice President /

NJ Region

973 299 3000

[email protected]

MATTHEW DOLLY

Senior Managing Director

Research & Analytics

973 299 3032

[email protected]

NORTHERN NEW JERSEY

119 Cherry Hill Road

Parsippany, NJ 07054

973 299 3000

CENTRAL NEW JERSEY

100 Overlook Center

Princeton, NJ 08540

609 269 1111

MIDTOWN MANHATTAN

380 Madison Avenue

New York, NY 10017

212 716 3500

136 Madison Avenue

New York, NY 10016

212 716 3500

DOWNTOWN MANHATTAN

1 Liberty Plaza

New York, NY 10006

212 716 3500

CONNECTICUT

1055 Washington Boulevard

Stamford, CT 06901

203 324 0800

LONG ISLAND

NASSAU COUNTY

1981 Marcus Avenue, E104

Lake Success, NY 11042

516 328 6500

LONG ISLAND

SUFFOLK COUNTY

200 Thirteenth Avenue

Ronkonkoma, NY 11779

631 389 2900


Rents haven’t moved much during the past year. Asking rents were lower for the second consecutive quarter and

averaged $22.29/sf gross, plus tenant electric, compared to $22.37/sf the previous quarter. Rents are up from $22.24/

sf from one year ago. Concession packages are essentially unchanged versus the previous quarter. Most landlords are

trying to cut their debt because they are anticipating continued stagnant market conditions for possibly more than two

years. These owners are trying to off er whatever concessions they can aff ord to retain tenants and will give in on that

extra month of free rent to secure a lease. Landlords who have eliminated their debt are obviously in a stronger position

and have a stronger hand. For bigger blocks of space, it is anticipated that there will be some rent growth and demand

but since there is such an oversupply of smaller offi ce units, the overall statistics will not indicate growth for awhile. In

general, landlords are working to keep their tenants and attract new ones, often accepting short terms, termination

options and early renewals.

Economic and political conditions continue to weigh heavily on the market, especially job growth. Coming on the heels

of 1999-2009 when the only employment growth in New Jersey came from government related jobs, private sector job

growth continues to increase modestly, now six consecutive months through August 2011. Nevertheless, employment

is still not at the level needed to keep up with offi ce availabilities. There is a growing awareness that many companies

are in very strong cash positions and the hope is that this liquidity will go towards expanding head counts. The market

is waiting for this more than anything else. It still seems that anything from the stock market to upcoming elections to

global economic conditions to terrorist threats can all cause a delay to any deals in progress. Until companies build

enough confi dence about the business cycle and get past these obstacles, the offi ce market will continue to slow walk

though the rest of 2011 and into 2012.

Information contained herein has been obtained from sources that we deem reliable. We have no reason to

doubt its accuracy, but we do not guarantee it. Some statements in

this report are forward-looking statements or statements regarding

future events, which involve risk and uncertainty, and there can be

no assurance that the results described in such statements will

be realized.

WWW.COLLIERS.COM/MARKETS/PARSIPPANYPRINCETON

Accelerating success.


UPDATE 3Q10 4Q10 1Q11 2Q11 3Q11 Last Year Last Qtr

NORTHERN NEW JERSEY

Availability Rate (%) Total 19.7% 18.8% 19.0% 19.9% 20.3% 0.6 0.4 pp

Direct 17.0% 16.0% 16.2% 17.0% 17.3% 0.3 0.3 pp

Sublease 2.7% 2.8% 2.8% 2.9% 3.0% 0.3 0.1 pp

Asking Rental Rate Total $22.78 $23.00 $23.06 $22.42 $22.40 -1.7% -0.1%

Direct $23.03 $23.30 $23.44 $23.37 $23.30 1.2% -0.3%

Sublease $21.05 $20.99 $20.49 $17.88 $17.64 -16.2% -1.3%

Vacancy Rate (%) Total 14.0% 14.2% 14.3% 14.9% 15.1% 1.1 0.2 pp

Absorption (Qtr) Total (211,123) 1,359,732 (372,836) (1,133,719) (476,452) -125.7% 58.0%

CENTRAL NEW JERSEY

Availability Rate (%) Total 21.1% 21.6% 21.4% 20.7% 19.8% -1.3 -0.9 pp

Direct 18.2% 18.5% 18.6% 18.2% 17.3% -0.9 -0.9 pp

Sublease 2.9% 3.1% 2.8% 2.5% 2.5% -0.4 0.0 pp

Asking Rental Rate Total $21.63 $21.56 $22.02 $22.31 $22.19 2.6% -0.5%

Direct $21.89 $21.79 $22.37 $22.77 $22.67 3.5% -0.4%

Sublease $19.46 $19.83 $19.05 $19.04 $18.79 -3.4% -1.3%


Absorption (Qtr) Total (23,124) (571,217) 192,442 717,104 1,071,447 4733.5% 49.4%

NORTHERN & CENTRAL NEW JERSEY

Availability Rate (%) Total 20.3% 20.0% 20.0% 20.2% 20.1% (0.2) -0.1 pp

Direct 17.5% 17.0% 17.2% 17.5% 17.3% -0.2 -0.2 pp

Sublease 2.8% 3.0% 2.8% 2.7% 2.8% 0.0 0.1 pp

Asking Rental Rate Total $22.24 $22.30 $22.56 $22.37 $22.29 0.2% -0.4%

Direct $22.51 $22.57 $22.92 $23.07 $23.02 2.3% -0.2%

Sublease $20.34 $20.46 $19.84 $18.34 $18.08 -11.1% -1.4%


Absorption (Qtr) Total (234,247) 788,515 (180,394) (416,615) 594,995 354.0% 242.8%

pp: percentage points

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