Jones Lang LaSalle
Region's office-space market on steady simmer
Thursday, January 26, 2006
By MARK PERKISS
Staff Writer
Ask commercial real estate broker Gerard Fennelly about the strength of the central New Jersey office market and he points to a speculative five-story building going up on Alexander Road in West Windsor with no signed tenants.
Ask Rutgers University economist James Hughes about the strength of the office market in the central part of the state and he points to the same development.
The building in question, the 313,000-square-foot Reckson University Square on Alexander Road in West Windsor, is the largest of three speculative projects currently under construction in the region.
The other two are a 115,000-square-foot building going up in Carnegie Center in West Windsor and a 167,000-square-foot structure in Princeton Forrestal Center in Plainsboro.
Fennelly, who heads NAI/Fennelly in Hamilton, and Hughes, the economist, say the construction burst is a sign of a strong economy and continued interest in the central New Jersey region.
But David Knights, the marketing director for Princeton Forrestal Center, who concedes his view is somewhat provincial, questions whether there is enough demand for almost 600,000 square feet of brand new office space.
"I think there's demand for two of the three of them, but all three may be too much," he said. "If it does all go it will have to be because one of the three projects attracts a new name that we don't know in the Princeton region."
The speculative building comes as Mercer County has a 12.8 percent vacancy rate in Class A office space, the kind sought and used by large companies or professional firms, Hughes said. That's much healthier than the overall New Jersey vacancy rate of 21 percent for Class A office space.
The reason, Hughes says, is obvious. "We have not been adding jobs in the professional, financial services and information sectors, which would prompt companies to take more space," he said. "On a statewide basis that makes for a very soft office market."
But in the Princeton region and Mercer County overall, the situation is much better, experts say.
"The county, particularly along Route 1, remains attractive," Fennelly said. "The Princeton address still counts. It's a brand. You get companies coming who want that address."
That's what Reckson Associates Realty Corp., which is building its mammoth project across Alexander Road from the Hyatt Regency Princeton in West Windsor, is counting on.
"We're confident we're going to be able to lease quality space at that location," said Todd Rechler, the company's senior vice president and managing director. "When you focus on good quality development in strong areas you're going to be successful. We've done that in other parts of New Jersey and we're optimistic here."
The company has just started its marketing effort to recruit tenants for the new building.
Statistics compiled by Fennelly show that the number of office space transactions has dropped slightly in the last two years from the boom of the late 1990s, when dot-com companies were gobbling up office space.
Knights of Princeton Forrestal Center says he's loath to crow too much about the office market, preferring to take a page from Hughes, who once described New Jersey's economy as the Goldilocks economy - not too hot and not too cold, but just right.
"The boom times are over, but we're not in doldrums either," he said. "We're seeing nice steady growth and that's cause for optimism as we go forward."
Charles Hill, Mercer County's director of economic opportunity, says what he sees in the office market makes him optimistic.
"The trend in the Route 1 Corridor at this point is more building on spec, without pre-signed tenants, and that's very encouraging," Hill said. "It speaks to the demand that is out there and untapped.
"We're very happy with the market in the Princeton market and we're seeing movement along the (Interstates) 195 and 295 and Route 130 corridors," he said. "We want to see that across the board and particularly in the city of Trenton, and we see that happening. Things are going well and we're very optimistic for the year ahead."
NOTE: Contact Mark Perkiss at mperkiss@njtimes.com or (609) 989-5723.
Region's office-space market on steady simmer
Thursday, January 26, 2006
By MARK PERKISS
Staff Writer
Ask commercial real estate broker Gerard Fennelly about the strength of the central New Jersey office market and he points to a speculative five-story building going up on Alexander Road in West Windsor with no signed tenants.
Ask Rutgers University economist James Hughes about the strength of the office market in the central part of the state and he points to the same development.
The building in question, the 313,000-square-foot Reckson University Square on Alexander Road in West Windsor, is the largest of three speculative projects currently under construction in the region.
The other two are a 115,000-square-foot building going up in Carnegie Center in West Windsor and a 167,000-square-foot structure in Princeton Forrestal Center in Plainsboro.
Fennelly, who heads NAI/Fennelly in Hamilton, and Hughes, the economist, say the construction burst is a sign of a strong economy and continued interest in the central New Jersey region.
But David Knights, the marketing director for Princeton Forrestal Center, who concedes his view is somewhat provincial, questions whether there is enough demand for almost 600,000 square feet of brand new office space.
"I think there's demand for two of the three of them, but all three may be too much," he said. "If it does all go it will have to be because one of the three projects attracts a new name that we don't know in the Princeton region."
The speculative building comes as Mercer County has a 12.8 percent vacancy rate in Class A office space, the kind sought and used by large companies or professional firms, Hughes said. That's much healthier than the overall New Jersey vacancy rate of 21 percent for Class A office space.
The reason, Hughes says, is obvious. "We have not been adding jobs in the professional, financial services and information sectors, which would prompt companies to take more space," he said. "On a statewide basis that makes for a very soft office market."
But in the Princeton region and Mercer County overall, the situation is much better, experts say.
"The county, particularly along Route 1, remains attractive," Fennelly said. "The Princeton address still counts. It's a brand. You get companies coming who want that address."
That's what Reckson Associates Realty Corp., which is building its mammoth project across Alexander Road from the Hyatt Regency Princeton in West Windsor, is counting on.
"We're confident we're going to be able to lease quality space at that location," said Todd Rechler, the company's senior vice president and managing director. "When you focus on good quality development in strong areas you're going to be successful. We've done that in other parts of New Jersey and we're optimistic here."
The company has just started its marketing effort to recruit tenants for the new building.
Statistics compiled by Fennelly show that the number of office space transactions has dropped slightly in the last two years from the boom of the late 1990s, when dot-com companies were gobbling up office space.
Knights of Princeton Forrestal Center says he's loath to crow too much about the office market, preferring to take a page from Hughes, who once described New Jersey's economy as the Goldilocks economy - not too hot and not too cold, but just right.
"The boom times are over, but we're not in doldrums either," he said. "We're seeing nice steady growth and that's cause for optimism as we go forward."
Charles Hill, Mercer County's director of economic opportunity, says what he sees in the office market makes him optimistic.
"The trend in the Route 1 Corridor at this point is more building on spec, without pre-signed tenants, and that's very encouraging," Hill said. "It speaks to the demand that is out there and untapped.
"We're very happy with the market in the Princeton market and we're seeing movement along the (Interstates) 195 and 295 and Route 130 corridors," he said. "We want to see that across the board and particularly in the city of Trenton, and we see that happening. Things are going well and we're very optimistic for the year ahead."
NOTE: Contact Mark Perkiss at mperkiss@njtimes.com or (609) 989-5723.
posted by Jones Lang LaSalle NJ News Blog at 11:09 AM
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