Having been active in New Jersey commercial real estate for several decades and observed a host of turns of the economic wheel, we feel that this current downturn is unique and any attempt to predict its trajectory can just turn out to be a sophisticated and frustrating guessing game. But we also believe that those of us with an intelligent survival strategy will be in place to take full advantage of new growth possibilities when they occur.
Although New Jersey’s unemployment figures did not increase substantially over the last quarter and office vacancy rates slowed somewhat, we see no realistic indication that the state’s firms are set for recovery. Even members of the Federal Reserve are not in agreement about the next steps but warn that job growth will be a slow, gradual process. And for those of us in real estate, jobs mean occupied office buildings. Suffice it to say, we believe that in all likelihood, a meaningful economic turnaround is still 12 to18 months away
That said, NBP and our parent company, Lawrence Zirinsky Associates are betting on the ultimate resiliency of New Jersey and are going to use this time and our resources to launch a multi-million dollar renovation program at 435 South Street in the Southgate Corporate Center aimed at putting the building on the leading edge of 21st century office buildings.
We remain bullish on Princeton, which is one of the state’s most stable markets with a current vacancy rate of about 15% and a stable tenant base. “Among our tenants at College Park at Princeton Forrestal Center, those involved in health care, pharmaceutical research and development and sophisticated technology seem to be those that are surviving the most successfully.
For their part, landlords are becoming competitive and extremely flexible in lease negotiations and are offering generous concessions in the effort to keep their building filled. Rents in Princeton are now averaging in the mid $20s, down from the upper $20s less than 18 months ago.
But for many firms struggling to hold on means shrinking staff sizes, downsizing office space and late rent payments, all of which have a negative impact for the landlord who must continue to operate his buildings and meet financial obligations. Credit worthy tenants are in a remarkably strong position as landlords are now willing to discuss asking rents and sign short-term leases just to keep buildings occupied.
National Business Parks has always made tenant retention our highest priority. And this has been our operating policy in good times and poor. We have been responsive to tenant needs and have continued to upgrade our buildings with sophisticated technology and contemporary remodeling,
College Park at Princeton Forrestal Center is an 11-building complex fronting Route 1. Included among tenants are SES Americom, Panasonic, the law firm of Drinker Biddle & Reath and Bracco Research. Call 609-452-1300 for information.