N.J. ranks high among U.S. market, offers higher office concessions than national average

Cushman & Wakefield Jason Price, Cushman & Wakefield’s director of Suburban Tri-State Research.

Cushman & Wakefield recently released Space Matters, a report on the four areas of importance to today’s tenants and landlords.

The report looks at the national trends behind office density, amenities, parking and concessions.

“With unemployment below 4 percent, companies are focusing on making smart decisions about their space — decisions that keep their employees happy and engaged,” said Revathi Greenwood, Americas head of research at Cushman & Wakefield. “Landlords are playing a critical role as well — ensuring their buildings stay competitive with a good mix of amenities, and affordable parking, and of course concessions where necessary to attract top tenants.”

Cushman & Wakefield’s New Jersey research team looked closely at the Garden State, and found that New Jersey ranked high among U.S. markets experiencing increased office concessions, according to Cushman & Wakefield’s New Jersey research team.

New Jersey’s 13.5 percent concessions jump from last year is much larger than the national average, the research team found. The jump was only outpaced by San Jose/Silicon Valley and New York, San Francisco and Boston.

“Free rent grew from an average of $13 to $14 per square foot last year, and TI allowances increased from $30 to $35,” said Jason Price, New Jersey research director. “While vacancy rates are in line with historical norms, rental rate growth was strong during 2017; the rent uptick was partially propped up by the cost of concessions. For 2018, we expect free rent averages to remain stable, and TI allowances will likely shrink. Conversely, our Space Matters report reveals that half of local markets in the U.S. are expected to see increased TI allowances in 2018.”

The area’s vacancy rates are in line with the norm, and 2017’s rental rate growth was strong in part due to increases in concessions, the report said.

The report said businesses in New Jersey give more square footage per employee than the national average. However, Cushman & Wakefield suggests in the coming years area companies will decrease square footage per employee.