Rising unemployment pinches North Jersey office market

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Leasing activity for top-end properties fell nearly in half from first quarter, report indicates.A second-quarter office market report by CresaPartners, a national real estate advisory firm with offices in Paramus, painted another painful portrait for activity in northern New Jersey.

Rising unemployment, particularly in the financial services sector, has created falling demand for space of all classes.

See next week’s edition of NJBIZ for a detailed look at activity along the Hudson Waterfront submarket.

Leasing activity for Class A space in North Jersey fell nearly in half, to 950,000 square feet from 1.8 million square feet in the first quarter, according to the report. Average rental rates also fell, dropping 15 cents to $26.98 per square foot. Class B space fared slightly better, with about 460,000 square feet leased, compared to 500,000 square feet in the first quarter. Rents for Class B space averaged $21.71 a square foot, the report indicated, down 9 cents from the previous quarter.

Among the report’s predictions for the North Jersey office market going forward:

— Declining employment will diminish demand for the next several quarters.

— The financial standing of many properties will erode rapidly.

— Net effective rents will decline further through 2009, and possibly beyond.