More businesses moving into Central Jersey

After declining for years, demand for commercial office space in Central New Jersey is on the rise.

“There’s been an uptick in leasing activity in office space recently, and Central Jersey is the place where that is most evident,” said Jeff Otteau, president of the Otteau Valuation Group. “Demand has been increasing, and as a result of that, vacancy has been declining.”

Rutgers economist James Hughes said many of the office buildings in Central Jersey were constructed 30 to 35 years ago, “however a number of properties have been repositioned, they have been upgraded, their information technology systems are state of the art.”

He also said office space in New York and on the Hudson River waterfront is becoming more and more expensive, “so some of that suburban office inventory in Central New Jersey is now being viewed as a real viable option for many companies.”

Otteau said several other suburban markets closer in to New York City have already seen demand for commercial real estate space increase, “and the central part of the state is just catching up with what’s already taken root in those other places several years ago.”

Hughes said the uptick in demand for office space reflects an improving economy.

“We have been adding jobs in professional, managerial components, legal services, engineering services and the like,” he said.

Otteau said this increase in jobs has become especially evident over the past year.

“We have seen a gain in the professional and business service jobs which fill office buildings, and so that is a bright spot right now," Otteau said.

Otteau also said some of the increased leasing activity “is occurring as a result of tenants leaving an older building that has not been modernized in favor of the newer, more appealing ones, so on a net basis that’s not always a gain for the market — but generally demand is rising.”

Over the past 10 to 15 years years many companies fled the suburbs and relocated in the cities, because millennial workers preferred to live and work in urban areas, Hughes said. But that trend has slowed, as some younger workers are now starting to return to Central New Jersey to live and raise a family.

He added while we are seeing job growth, it’s not as robust as the expansions of the 1980s and '90s, but far stronger than the job growth we saw between 2002 and 2008.

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com