Newmark Grubb Knight Frank (NGKF) recently released a white paper research report on the shifting trends in the New Jersey office market. According to the report, strong corporate attraction and retention have contributed to robust leasing and increased development in the state. This upswing in activity has positioned northern New Jersey as the seventh largest office market in the nation.
Eighty percent of New Jersey’s office inventory was built in the 1980s, presenting a need for modernization and renovation. Tenants in the market are looking for upgraded amenities and working environments that are not typically provided by older buildings. The report notes new drivers in office design include high ceilings, open floor plates, improved window lines and exposure, modern building amenities such as food service and fitness centers, state-of-the-art infrastructure and ample parking.
Corporations are increasingly committing to existing Class A office space or built-to-suit opportunities. In 2015, all deals over 100,000 square feet were in either Class A or built-to-suit buildings. Major drivers for built-to-suit opportunities include a lack of available large blocks of space and improved value and efficiency. Access to developable land at value pricing also has tenants vacating outdated office space and opting for built-to-suit or recently renovated office buildings. Currently, there is approximately 3 million square feet of office space under construction or under renovation.
The shift in demand for workplace environments, coupled with an aging inventory, has contributed to a spike in reconstruction and built-to-suit opportunities for the marketplace. Three of the five current built-to-suit projects were announced in the last year. These tailored and dynamic work spaces also contribute to increased employee satisfaction and workplace efficiency.
Looking forward, NGKF predicts the New Jersey office landscape is likely to change as outdated properties are transformed into more in-demand facilities through adaptive re-use and/or strategic capital improvements.
Newmark Grubb Knight Frank is one of the world’s leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF’s 12,800 professionals operate from more than 370 offices in established and emerging property markets on six continents. For further information, visit www.ngkf.com.