New Jersey's Transit Hub Office Markets Outperform Suburban Areas

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According to JLL's newly released Transit Hub Perspective report, New Jersey's transportation-centric office markets remain at the center of commerce and lifestyle throughout the state.

The state's Transit Hub Market (Hoboken, Jersey City, Newark, New Brunswick and Trenton, NJ) consistently boasts higher average asking rental rates and lower vacancy rates than its suburban counterparts (Metropark, Morristown, Princeton and Summit, NJ). Despite higher vacancy rates in certain areas, New Jersey's transit-focused office markets remain firmly on the radar screen for companies seeking locations that are readily accessible to their employees.

"Transit-oriented locations continue to play a pivotal role in New Jersey's office market," said Robert Kossar, executive managing director and head of JLL's New Jersey and Long Island operations. "During the past several years, we have witnessed a migration of businesses to transit-centric locations throughout the state. Technology has helped produce a mobile workforce that is no longer constrained to dedicated offices and cubicles. Younger workers are opting to live, work and play in urban locations with access to mass transportation systems. For companies looking to tap into the innovation pipeline via Manhattan's young talent pool, transit connectivity is critical."

The JLL report defined the Transit Hub Market as those areas characterized by one or more of these factors: a significant number of office properties clustered near or within a downtown, urban or town center; adjacent or proximate to a New Jersey Transit rail station; and offering a mass transit commuting option within walking distance of the commuter's office location.

The overall Transit Hub Market boasted an average asking rental rate of $29.57 per square foot at year-end 2013, a 3.5 percent boost from rents of $28.56 per square foot at year-end 2012. The Suburban New Jersey office market saw figures that were significantly lower, recording rates of $23.24 per square foot at year-end 2013, a 2.6 percent increase during the past year from rents of $22.65 per square foot at year-end 2012.

With expanding businesses gravitating toward Transit Hub Market locales, those areas have continued to outperform the Suburban New Jersey office market. Overall, the state's Transit Hub Market saw a vacancy rate of 18.8 percent at year-end 2013, a 14.6 percent (or 2.4 percentage point) increase from 16.4 percent at year-end 2012. The Suburban New Jersey office market posted a vacancy rate of 27.2 percent at year-end 2013, a 5.9 percent (or 1.7 percentage point) decrease during the past year from 28.9 percent at year-end 2012.