by Vincent Marano
Chief Operating Officer
At National Business Parks, we feel the New Jersey commercial real estate market has nearly bottomed out and is showing signs of a slow uptick. While rental rates are still somewhat depressed and there is plenty of vacancy, we are nonetheless seeing a reduction in rent concessions and work letter allowances for existing space. Another positive sign is that landlords are showing a reluctance to write short-term leases and are now insisting on five to ten-year terms.
In our own portfolio, we are doing deals, but activity has been spotty. With College Park at Princeton Forrestal Center at 92 percent occupancy and no large blocks of space currently available, we are filling in smaller spaces and have leased nearly 70,000 square feet in the first six months of the year. While we have welcomed two new tenants –– GenPsych (3,700 square feet) and Stone & McCarthy (3,100 square feet) –– we have been fortunate to sign renewals or expansions with six existing tenants. We do anticipate 80,000 square feet becoming available at 107 College Road East when Bracco Diagnostics Inc. downsizes and vacates next year and we have already begun actively marketing that space.
In Princeton, we are also seeing more demand from medical users in anticipation of the opening next year of the new University Medical Center of Princeton. In fact, we believe that more of our 5,000 to 10,000-square-foot units that typically would be occupied by mid-size companies are going to be filled by medical/healthcare users who want to capitalize on our proximity to the hospital.
This trend is also impacting our Morristown portfolio, located close to Morristown Medical Center. We recently leased 40,000 square feet at 465 South Street to various divisions of Atlantic Health System, bringing that building to 95 percent occupancy. This follows the leasing last year of the entire 189,000-square-foot 435 South Street to Atlantic Health. We are currently completing a major renovation of that building and will be announcing various users shortly.
In terms of a true turnaround, we do not anticipate a healthy economy anytime soon. However, we are already giving thought to new construction based on the proximity of our vacant land to both the Princeton and Morristown medical centers. While six years ago, the best use of our land would have been for office space, we are now considering medical uses such as surgical centers, rehabilitation centers, or even multi-tenant physician centers.
National Business Parks,
2 Research Way, Princeton. 609-452-1300. www.collegepk.com.