Companies flock to Metropark while other areas have high vacancy ratesISELIN – With one of the tightest office markets in New Jersey and the lowest vacancy rates in years, Metropark is a bright spot in the stateÂs otherwise sluggish commercial real estate sector. Driving the demand are local companies and New York City-based firms looking to move to or expand operations in the area because of its central location and easy access to transportation lines.
ÂIn terms of how Metropark compares, in the last two years itÂs probably had the strongest leasing activity and the strongest absorptionÂ of all the stateÂs office markets, says Michael Alfieri, president of M. Alfieri Co. Inc., an Edison-based real estate developer. The companyÂs properties include the Metropark Corporate CampusÂa four-building office complex comprising more than 1 million square feet.
ÂEverybodyÂs very, very well leased up,Â says Drew Persson, first vice president at GVA Williams, a real estate services firm in Parsippany. Persson handled about 187,000 square feet of leases last year at the Woodbridge Corporate Plaza, a 650,000-square-foot, six-building office park in Iselin that is currently about 94 percent occupied.
Metropark, a commercial area that encompasses 21 buildings totaling 3.8 million square feet in parts of Edison, Iselin and Woodbridge, saw its vacancy rate drop from 12 percent during the first quarter of 2006 to 7 percent during the first quarter of this year, says Paul Giannone, executive vice president of real estate services firm Jones Lang LaSalle in Iselin. He says this compares with a statewide vacancy rate of about 18 percent.
Matt Dolly, director of research and marketing at GVA Williams, says Metropark makes up most of the North Edison/Woodbridge commercial market, which covers about 5 million square feet and had a 9.79 percent vacancy rate during the first quarter. That was the fourth-lowest vacancy rate after urban Essex, Short Hills/Millburn and the North 17 Corridor for the quarter, and the areaÂs lowest rate in five years, Dolly says. Teaneck/Ridgefield had the highest first-quarter vacancy rate at 40.43 percent.
MetroparkÂs low vacancy rates are tied to its diverse tenant base, which includes financial services and pharmaceutical companies, according to Alfieri. ÂItÂs really a complete cross section of Fortune 500 companies,Â he says. ÂWhatever industry the other markets lack, Metropark seems to have.Â Part of this diversity stems from MetroparkÂs central location in New Jersey, which provides a broader labor pool than locations further north or south can offer.
ÂItÂs just a very convenient market,Â says Persson. A train ride to Manhattan and Philadelphia is about 40 minutes by way of NJ TransitÂs Northeast Corridor rail line, and many employees can walk to their offices from the Metropark station. The area is easily accessible from the rest of the state via the New Jersey Turnpike, the Garden State Parkway and routes 1 and 287.
Convenient location was a major attraction for AXA Equitable, a New York City-based financial services company whose AXA Advisors retail division renewed its lease for 26,276 square feet at 90 Woodbridge Center Drive in February. Jim Coppola, executive vice president of AXA AdvisorsÂ Woodbridge branch, says the location facilitates recruiting and meetings with representatives for client reviews and seminars. ÂOur space is easy to get to, which is important for financial professionals who are on the road 80 percent of the time,Â he says.
Lingerie maker Maidenform, which plans to relocate its headquarters from Bayonne to Woodbridge Corporate Plaza this summer, chose the area because of the easier commute. ÂBeing on the train line with the Metropark train station thatÂs only a few minutes around the corner, that was clearly a selling point,Â says Dorvin Lively, CFO at Maidenform.
The rise in demand has pushed rents up by 30 percent to $32 a square foot over the past year, says Giannone. Yet overall operating costs at Metropark are still about half of what they would be in downtown Manhattan, and one-third of what they would be in midtown Manhattan, he says.
Lower costs are encouraging some companies with large Manhattan operations to look closely at Metropark, particularly for business-continuity facilities. ÂItÂs further away from Manhattan, but still has some of the benefits of being close enough because of mass transportation,Â says Giannone. He estimates that 10 to 15 percent of last yearÂs leasing activity at Metropark came from companies relocating operations from Manhattan to the area for the first time. Companies with a presence in both locations that moved more workers to Metropark made up an additional 25 percent of last yearÂs leasing activity, he says.
Persson expects more relocations from Manhattan. Hachette Filipacchi Media US Inc., the New York-based subsidiary of Hachette Filipacchi MÃ©diasÂthe worldÂs largest magazine publisherÂis looking at Metropark, the Meadowlands and Jersey City for 150,000 square feet of space, he says. Two big financial firms are considering taking space at the 250,000-square-foot former Engelhard/BASF building at 101 Wood Ave. S. in Iselin. Other potential deals include a major health care company and two engineering construction firms seeking 40,000 to 50,000 square feet each at Metropark.
Persson says new office projects going up at Metropark are likely to attract more companies from New York City. Woodbridge-based Atlantic Realty Development Corp. is building MetroTop Plaza II, a nine-story, 255,000-square-foot Class A building at 111-115 Wood Ave. S. in Iselin. The property, which is being marketed by Giannone and his team, is the first speculative development to be built in Metropark since 1991.
Meanwhile, M. Alfieri is laying the foundation for a 375,000-square-foot Class A office tower at 479 Thornall St. in Edison. The company is marketing the property to prospects here and in New York as a build-to-suit building and is currently in discussions with a local company.
Alfieri says the relocation of offices from Manhattan has not yet been as significant as many in the brokerage community had expected. He says i-flex solutions, an India-based unit of Oracle Corp. that provides IT products and services, is moving its U.S. headquarters from Manhattan to 379 Thornall St. in Edison, where it will take two floors totaling 50,000 square feet. But he says that relocation is the only such move he has heard about in the past year. ÂWe have not seen the overflow,Â Alfieri says. ÂIn fact, thatÂs more the talk nowÂhow it has not happened.Â
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