The 64.9-million-square-foot Central New Jersey general purpose, multi-tenant office market has stabilized but remains weak as of the second quarter of 2012. The vacancy rate of 23.3% was down 10 basis points from the prior quarter but was still the seventh highest among the top Reis markets. The Class A vacancy rate, at 25.7%, was higher than the Class B/C rate, at 20.9%. Net absorption for the quarter is reported at 20,000 square feet, following minus 322,000 in the first quarter. A total of 182,000 on the plus side in July and August reduced the rate to 23.1%, despite the completion of the 120,000-square-foot New Brunswick Gateway Transit Village in New Brunswick.
Reis reports 442,800 square feet under construction, including the 259,000-square-foot Church & Dwight Company Headquarters, due to complete in December in Trenton. Despite improved demand, a 23.0% vacancy rate is forecast for year-end 2012. With net absorption forecast at 1.1 to 1.3 million square feet per-year thereafter, the rate is forecast to descend to a still high 18.1% at year-end 2016.
Rents remain flat. In the second quarter both the average asking rent and the average effective rent added a penny to $23.72 psf and $19.14 psf. Another one penny gain for each had followed by August, and the increases for all of 2012 are predicted at a modest 0.5% asking and 0.9% effective. Subsequent annual increases are expected to reach the 2.5% to 2.9% range for the asking average and the 3.0% to 3.9% range for the effective average.
Cushman & Wakefield reports an overall vacancy rate of 19.4% and an overall weighted average rental rate of $23.78 psf. Leasing is “dominated by technology and pharmaceutical corporations along the I-78 Corridor,” according to Cushman & Wakefield.