As 2014 comes to a close and we slide into the new year, things are looking up in the South Jersey office space market, according to a new report issued by Wolf Commercial Real Estate, a South Jersey commercial real estate brokerage firm that specializes in Southern New Jersey commercial real estate listings and services.

MARKET OVERVIEW

With five-plus years of recovery behind us, the economy appears to have finally found its footing.  A low interest rate environment has allowed property values and rental rates for Southern New Jersey office space to rise steadily, though still far off from pre-recession levels. Job growth has improved and businesses continue to show optimism through expansion and hiring. Office employment has risen more than two percent over the past year. Demand for office space in South Jersey has been slower than other South Jersey commercial real estate sectors, but signs of improvement can be seen in incremental growth.

The market for office space in Southern New Jersey also is showing signs of increased construction activity, although vacancy rates have not fallen as quickly as some would have anticipated.  Demand for quality assets has improved steadily, and we continue to see a flight to quality. Businesses also continue to operate with more efficiency, which is one of the major reasons that it is taking so long for vacancy rates to come down. Demand for Class A product in the South Jersey office space market continues to remain strong, and this flight to quality assets is forcing lower quality building owners to reposition and improve their Southern New Jersey commercial real estate properties to remain competitive.

INVENTORY, TRANSACTIONS, AND RATES

As of the end of the third quarter, data collected by the team at Wolf Commercial Real Estate, a South Jersey commercial real estate broker with expertise in Southern New Jersey commercial real estate listings and services, shows a 9.6% vacancy rate in Burlington County and an 18.8% vacancy rate in Camden County.  The overall vacancy rate for Southern New Jersey office space and other South Jersey commercial properties stood at approximately 14.2%.

The pace of growth in the South Jersey commercial real estate sector should continue to improve in the coming months as small and mid-sized businesses continue to expand and economic incentives help with tenant retention and spur relocation from other areas within the Tri-State area. Most of the fundamentals of the Southern New Jersey commercial real estate market improved during the quarter. Office employment increased, which will send vacancy rates lower and rents and sales prices higher.

Larger deals for office space in South Jersey and other South Jersey commercial properties were concluded across several industries, including businesses that specialize in consulting, education, financial services, health care, government services, and computer services.

Rental rates continue their slow climb back toward pre-2008 levels. In the third quarter, average rents for Class A & B product in the South Jersey office space market were up by 5% over the previous quarter. Rents continue to show strong support in the range of $11.00-$14.00/sf NNN or $21.00-$24.00/sf gross, with an overall market average showing strong support in the $11.60/sf NNN or $21.60/sf gross for the deals completed during the third quarter.

SNJ BECOMES A MAGNET FOR BUSINESSES

When the Economic Opportunity Act of 2013 was signed into law, it ushered in a new era in attracting businesses to the Garden State – particularly to the southern counties. The new law incentivizes growth and investment by large and small companies across several industries. Companies that create as few as ten full-time jobs can now benefit from significant tax benefits. The law also provides greater tax credits for companies that create jobs and invest in development in the Southern New Jersey counties of Burlington, Camden, Gloucester, Atlantic, Cumberland, Salem, and Cape May.

With the favorable tax environment created by these programs, ample availability of land, and our proximity to many major east coast cities, it is likely that more large businesses will choose to establish or relocate their national headquarters in Southern New Jersey.

WHAT THIS GOOD NEWS MEANS FOR YOU AS A TENANT

For tenants occupying greater than 10,000 square feet of office space in Southern New Jersey, there are several opportunities in both Camden and Burlington Counties to consider a flight to quality or to use the vacancies as leverage to negotiate better lease terms.

For those requiring less than 10,000 square feet of office space in South Jersey, the market presents the greatest opportunity. With ample Southern New Jersey office space available in this size range in both counties, users can take advantage of the ability to right-size and negotiate more favorable lease terms.

The chart below lists the opportunities for blocks of space ranging in size from 2,000 -100,000 square feet of office space in Southern New Jersey and other South Jersey commercial properties. The survey by Wolf Commercial Real Estate, a commercial property broker in New Jersey, includes Class A & B properties located in Cherry Hill, Marlton, Moorestown, Mount Laurel, Pennsauken, and Voorhees. We included mid-rise and single story buildings that can accommodate an office user.

Tenants in the South Jersey office space market with leases coming due in the next two years should continue to review their leases, operating expenses and the overall market for opportunity. Wolf Commercial Real Estate, a commercial property broker in New Jersey can create individualized solutions to help in several ways:

• Wolf Commercial Real Estate can analyze your current lease situation and determine whether and when it would be prudent to relocate or renegotiate more favorable terms on existing space.
• Wolf Commercial Real Estate can create a valuation matrix that includes your financial situation, property needs, and available alternatives.
• For tenants with a remaining lease obligation, Wolf Commercial Real Estate can negotiate a restructuring or early termination of the lease, or we can represent you in a sublease arrangement.
• As a premier South Jersey commercial real estate brokerage firm with expertise in Southern New Jersey commercial real estate listings and services, Wolf Commercial Real Estate can develop negotiating strategies based upon our extensive knowledge of the market and the financial position and reputation of individual landlords.

If you have a need for South Jersey office space or any other medical, retail or industrial space, or if you have a lease nearing expiration, or if you want to learn more about these market opportunities, please contact Wolf Commercial Real Estate, a South Jersey commercial real estate broker that specializes in Southern New Jersey commercial real estate listings and services.  As a leading commercial property broker in New Jersey and Pennsylvania, our team provides ongoing information to help our clients achieve bottom line savings, reduce costs, and mitigate risk.

Wolf Commercial Real Estate is a South Jersey commercial real estate broker that  provides a full range of Southern New Jersey commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other South Jersey commercial properties for buyers, tenants, investors and sellers.  Please visit our websites for a full listing of South Jersey commercial properties for lease or sale through our South Jersey commercial real estate brokerage firm.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.