This has been a decade of national expansion, yet “New Jersey’s employment growth totally and absolutely refused to grow at a pace that had historically accompanied previous economic expansions in the state.” And growth is unlikely to pick up any time soon. So says the November Sitar-Rutgers Regional Report published by economists James W. Hughes and Joseph J. Seneca of the Bloustein School together with the Sitar Company, a commercial real estate firm with offices in Iselin.
The report found a stubborn stall. While key competitors such as North Carolina were gaining more than 90,000 private sector jobs in the middle of the decade, New Jersey was adding only about 20,000. The paltry growth then suddenly “flatlined” in 2007. During this year a close neighbor, New York City, added 86,000 jobs, 23 times the number that New Jersey was able to tack on.
Things began to turn around earlier this year with New Jersey’s growth tracking that of the rest of the country. But, not surprisingly, all of that has ground to a halt.
“However, just as we started to track the nation, the nation cratered,” is how the Sitar report puts it, adding that “employment growth has fully expired this year.”
Fewer workers translates into a diminished need for desks and for the offices that hold them. Vacancy rates around the state are high, but the increase has been less marked in central New Jersey, where the vacancy rate for the third quarter, at 15.7 percent, remained unchanged from the vacancy rate in the previous quarter. Rents, which have declined elsewhere in the state, even managed to climb a little bit in central New Jersey, going from $24.82 in the second quarter of 2007 up to $25.01 in the third quarter of this year.
The vacancy rate in Mercer County for the third quarter is 15.4 percent. It is nearly double that rate, 29.7 percent, in nearby Hunterdon County, and a little less, 13.7 percent, in Middlesex County.
The banking crisis gripping Manhattan, the finance capital of the country, will have ripple effects that no one can yet fully predict. But, says the Sitar report, “It is apparent that the Northern and Central New Jersey office market will experience a rising vacancy rate in future quarters due to the economic slowdown and the amount of office space currently under construction in this market. Recent bankruptcies and acquisitions in the financial sector are fueling fears of the unknown in the current economic climate.”
But nothing remains static in a dynamic state. There is constant change as fresh groups arrive, set to make their mark. The Sitar report notes that New Jersey has seen a tremendous growth in its Asian population, and that many of the newcomers have started small to mid-size businesses, some of which have grown to be thriving multi-national companies. It cites SouthPole USA as one example. Formerly a mom-and-pop business, the clothing company has recently expanded to the point where it has leased a 418,000-square-foot distribution center in South Brunswick.