Vacancy rates in New Jersey’s office and industrial real estate markets are expected to fall this year, but the pace will be slow as the state’s employment growth lags behind the national pace, executives with Cushman & Wakefield said Wednesday.
A slowdown in layoffs and rising corporate profits have laid the groundwork for an economic recovery, said Ken McCarthy, the firm’s managing director for New York-area research. But he said companies are still reluctant to hire because of government and political uncertainty in the United States and abroad.
In New Jersey, where the 9 percent unemployment rate is above the national average, the recovery is moving at a slower pace, McCarthy said during the firm’s commercial real estate review and forecast. Projections say the Garden State’s pace will eventually quicken, but not until around mid-2013.
“We do think that New Jersey will start to accelerate and more closely match national growth, but it’s just going to take a while,” McCarthy said. “The New Jersey real estate market reflects this sluggish situation.”
Mirroring employment growth, the state’s office market is “really pretty stagnant right now,” he said. Office vacancy increased slightly in northern New Jersey in 2011, to 17.9 percent, a sign of struggles in the region’s suburban submarkets and success along urban areas like the Hudson waterfront.
In central New Jersey, vacancy fell slightly to 19.8 percent, McCarthy said. And despite uncertainty about job levels, vacancy is expected to fall in 2012, due in part to the lack of new construction in the region, he said.
Positive momentum in the state’s industrial market was fueled by leasing in warehouse and distribution space, McCarthy said. In major submarkets such as the Meadowlands, the port region, the lower I-287 corridor and New Jersey Turnpike exits 8A and 7A, warehouse and distribution vacancy fell between 2 and 5 percent, he said.
“That’s the market and the product type in the industrial market that was the best performer in 2011 and is likely to remain the best performer in 2012,” McCarthy said.
