Demand For New Jersey Commercial Office Space On The Rise
February 23, 2016
New Jersey Commercial Office Space is hot right now!
A new Jones Lang LaSalle report found that New Jersey commercial office space is in the “rising phase” in the real estate cycle. According to JLL’s report, New Jersey’s landlord-favorable office space has many commercial real estate industry experts projecting an extremely bright future for the state.
New Jersey’s strong job market attracting companies to office spaces
The report found that with the exception of June and July, the state added job gains each month in 2015 for a total of more than 55,000 for the year. This represented a 15-year high in new job creation. With these rapidly increasing job gains, the outlook for the office market is bright for this year.
New Jersey is the more attractive option to Manhattan
The most significant reason for this shift toward office space, particularly in the northern and central New Jersey areas, is proximity to Midtown Manhattan. According to Real Estate Weekly, Michael Stoler, president of New York Real Estate TV and moderator of the NYC Real Estate Expo panel, noted that office locations in New Jersey have become popular due to proximity, safety and transportation.
“(The industry) thinks of Hoboken, not Newark, it’s not the topic of interest. But we’ve lost some tenants to New Jersey,” Stoler explained. “Why?”
The answer to the question Stoler posed is simple: cheaper land prices and the same basic amenities are contributing to a positive future for companies moving to New Jersey office spaces. In fact, these northern and central New Jersey locations such as Jersey City, Red Bank, Monmouth County and Bergen County are positioned to have strong futures in the long- term because they are located within 30 minutes of Manhattan. This enables them to offer the same attractive factors of New York City, with the added bonus of more industrial and office spaces, affordable housing and commercial entities.
New Jersey gains support of commercial real estate experts
At the NAIOP Annual Meeting and Commercial Real Estate Outlook in New Jersey, more than 300 commercial real estate leaders cited New Jersey as a location with limitless potential. According to an NJ.com report, Benjamin Breslau, international director of Americas research with Jones Lang LaSalle, stated at the conference that the state fits all the criteria of the national push toward urbanization.
“Transit-oriented, dense, urban environments are doing well, and suburban markets are slow,” Breslau argued. “One of the greatest opportunities for developers and investors over the next decade may very well be reinventing the suburbs.”
With the demand for mixed-use office locations on the rise, New Jersey’s abundant land will continue to attract big business. One prime example cited at the conference by Mitchell Rudin, CEO of Mack-Cali Realty Corporation, was his company’s Harborside complex on the Jersey City Waterfront.
“There are 135,000 workers and residents within walking distance of the property who are prospective patrons of retail and dining establishments,” Rudin said.
Ed Russo, CEO of Russo Development, agreed that projects like Mack-Cali’s Harborside complex have the potential to be game-changers in the area due to the close proximity of New Jersey’s suburbs to Manhattan.
“The demographics in the Northeast Corridor are particularly ripe for development,” said Russo, whose firm is currently focused on multifamily and data center projects. “In addition, this year’s Supreme Court ruling relieving the Council on Affordable Housing of responsibility for affordable housing rules and putting it in the hands of municipalities is opening an enormous opportunity we haven’t seen in years.”
Russo also added that there are numerous projects his company is planning in the northern and central New Jersey areas due to a lack of inventory in New York City locations.
“With the shortage of available space and increased competition, we are finally starting to see some meaningful appreciation in rents, which is long overdue,” Russo commented. “We expect this trend to continue in 2016.”