Cassidy Turley: NJ Office Sector Making Solid Progress
- Oct 02, 2013
Last month, Cassidy Turley tackled the Manhattan market with its office report showing a steady growth in that sector.
This time, the private commercial real estate services firm took on New Jersey, showing that the Garden State’s office sector is trending up and turning a corner, which is attributed to steady job growth and a new corporate tax break recently signed into law by NJ Gov. Chris Christie to attract new businesses.
“New Jersey got whacked by the recession,” said, with no pun intended, Cassidy Turley’s Chief Economist Kevin Thorpe, when referring to the state’s loss of 230,00 jobs in 2009, during his Sept. 24 slideshow presentation at Cassidy Turley’s office in Chatham, NJ, to which local press was invited.
However, as tough as are its inhabitants, NJ is also showing its brawn and bouncing back, with a gain of 49,000 jobs in 2012, which is better than the historical average of 31,000. This year, NJ created 76,000 new jobs, according to the Bureau of Labor Statistics. This is the fourth highest job growth on record, according to Thorpe.
He added that NJ’s metros are all outpacing the U.S. in terms of job creation, with Bergen, Hudson and Passaic counties leading the way, in almost all sectors. The construction sector is at the forefront with the creation of 5,000 new jobs, which shows housing ramping up locally.
The two main drivers of office space in NJ during the recovery period are professional services and financial services.
“All of the sectors that drive demand for CRE are in growth mode now in NJ,” Thorpe added. “It is worth remembering that NJ has a long way to go.”
The Garden State is still down 105,000 jobs post-recession and few sectors have fully recovered. Those that have bounced back completely include national business services, education and healthcare.
Nevertheless, what this means about the office sector on a national level is that office demand is not necessarily following suit to the rise of employment. Square footage requirement per worker is down by 22 percent, according to CoreNet Global.
“(The) U.S. has been in fiscal austerity mode for the past two years,” Thorpe said. “Definitely spending has shrunk, the goal is to bring deficit spending to GDP level growth.”
To help business progress along in NJ, Gov. Chris Christie signed legislation Sept 18 aimed at growing NJ’s tax incentive program to create and retain jobs in the state. The new law is said to expand eligibility by decreasing minimum investment and job thresholds and increasing maximum award, and provide tax increment financing to help large commercial development, according to Cassidy Turley.
“This puts NJ back on the radar and the new economic legislation signed by Christie may lure businesses (back to the state),” Thorpe concluded.