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Articles Award-winning developments re ect success of collaboration 1 Towns spur growth inside their borders Health and Wellness Ensure you get true medical team care In the Trenches If you change they will come 1

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April 2013 Issue 4 / Volume 5

Member Perspective
By Tom Semler

O ce availability rates is 25 percent the new normal?


leases roll, oftentimes with little or no impact on A properties. the countys availability rates. The lesser quality developments should continue to nd the market challenging. Corporations such as BASF, Realogy, Biomet, Successful developers may adapt to trends in Bayer, Honeywell, P zer and Pinnacle have the usage of o ce space by recon guring older recently announced or completed major real properties with additional parking, enhanced estate transactions in Morris County that energy e ciency, utilization of green materials involve millions of square feet. For the most and expanded amenity packages. part, these consolidations/relocations involve companies that already have a presence in the Other secondary o ce projects may be ripe county. Although retention of these businesses for redevelopment as alternative uses, such is critical, these relocations involve vacating as residential, medical, retail, governmental, existing space and will not necessarily result in educational, recreational or religious. an overall net absorption and reduction in the Alternative-use redevelopment of obsolete available space inventory. product will become a major focus of proactive Morris County maintains a competitive position in attracting and retaining business. It is considered a premier o ce environment given its robust highway network, quality of life, amenity base, extensive park system, educated labor force and established business community. The best located o ce developments that provide a exible environment suited to the needs of tomorrows businesses should continue to attract quality tenants from both inside and outside the county. There are currently several major corporations from other parts of New Jersey considering a relocation of major o ce operations to some of these Class developers working in conjunction with progressive municipal o cials. The decreased demand for o ce space is expected to continue for some time, with availability rates remaining high for the near term. As the economy improves, rates should gradually decrease but are not likely to return to the historic lows of the 90s. Given the current dynamics of the o ce market, 20 percent may be the new 15 percent. Thomas Semler is senior vice president at Avison Young. He can be reached at 973.753.1107 or tom.semler@avisonyoung.com.

The overall availability rate for o ce properties Technological advancements that now make (all classes) in Morris County is currently in it feasible to work e ectively from a remote excess of 28 percent. A historical view of location (telecommuting). availability rates reveals a gradual but consistent A next-generation workforce that is more accepting of non-dedicated o ce spaces increase over the past two decades. (sharing). Despite minimal speculative construction Alternative o ce environments, including added to the o ce inventory over the past 10 furniture systems that encourage years, availabilities have reached historic levels collaboration while reducing underutilized in Morris County. Is it reasonable to expect an spaces. eventual adjustment and return to equilibrium Shifting corporate cultures with an levels of availability rates below 20 percent? Or increasing number of employers supportive is 25 percent the new normal? of telecommuting and group workspace Morris County is certainly not alone. Most con gurations. suburban markets nationwide continue to A decreased need to provide space for experience soft demand and high availability old style items such as books, ling rates as businesses seek to increase the cabinets, reception areas, fax machines, etc. utilization rate of their facilities and downsize When the commercial base of Morris County their foot print. Leased space sizes have been was expanding dramatically in the boom years shrinking and the average square foot-perof the 80s and 90s, many of the businesses worker has fallen considerably across most lling the newly constructed speculative industry groups. o ce buildings were relocating from outside There are a number of factors contributing the county usually from the east. With the to downward pressure on o ce demand, substantial growth of the Morris County including: business community, todays o ce market is An uncertain economic environment. more mature and self-su cient. Many of the Corporate budgetary pressure to reduce newer transactions involve successful local occupancy costs (downsizing). operations that play musical chairs as their

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