We assembled a panel of industry experts to tackle this month’s question.
Here’s what they had to say.
Edwin H. Cohen, principal partner, Prism Capital Partners (Bloomfield)
Without a doubt, life sciences has emerged as a dominant sector fueling New Jersey office demand in the current cycle, and we continue to see large deals close and significant requirements coming in to provide even more traction. That said, one of the Garden State’s greatest strengths lies in the diversity of its tenant base — historically, today and moving forward. Across industries, among companies with available revenue, there exists a penchant for next-generation, Class A product. Well-capitalized domestic and international organizations are recognizing that investing more in their real estate enables them to capture the workplace lifestyle (via enhanced amenities, image and atmosphere) needed to develop teams rich with top-quality labor.
As such, these tenants are providing robust upside for New Jersey — by creating strong justification for the advancement of development and redevelopment projects that are revitalizing and redefining the regional office market.
John D.S. Hatch, principal, Clarke Caton Hintz (Trenton)
The greatest opportunities in the New Jersey office market are from a range of new, creative and expanding knowledge industry companies. While legacy companies and industries (such as pharmaceuticals, back office space for New York City) will continue to have a reduced impact, New Jersey can provide the less expensive office and industrial space that these young and growing companies are looking for. In particular, creative companies will be attracted to the lower costs of New Jersey’s smaller cities and their workers to the hip grittiness in places like Trenton, Newark and Paterson. Think Brooklyn, but much cheaper! Research and development at New Jersey’s world-class universities as well as trains connecting most New Jersey cities to major markets like New York and Philadelphia add to the attraction.
This is a great opportunity for Gov. Murphy and the Economic Development Authority to craft new incentives that are especially geared to these creative companies. These incentives should be flexible and shorter-term, so that these fast-growth industries can take advantage of them.
Andrew Judd, managing principal, Cushman & Wakefield (East Rutherford)
As evidenced by the recent upturn in office leasing and based on current tenant demand, the industries that have typically been at the core of New Jersey commerce will continue to drive the market throughout the state. Large transactions (greater than 100,000 square feet), as well as small and midsized deals in the foreseeable future will come from the life sciences industry (both pharma and biotech), financial services, the TAMI sector and health care. Based on projected employment growth, the industries that will add to the upside and bolster future market fundamentals (in addition to financial services and technology and, to an extent, major co-working companies) include professional and business services. Many of the firms in this sector support the day-to-day activities of firms in the primary industries with professional, technical, management and administrative services, including architecture, engineering, law, accounting, information technology and business consulting.
John Saraceno Jr., co-founder and managing principal, Onyx Equities (Woodbridge)
Types of tenant: New Jersey office owners have speculated on what the workforce of the next 15 to 20 years will find important. We have done so through the lens of human resources and talent recruiters. It would stand to reason that organizations who prioritize 1) inviting, amenitized work spaces and 2) compensation packages sensitive to transportation and housing offsets, will hold the greatest upside for New Jersey’s office market.
Types of industries: New Jersey must continue to attract and maintain its dominance in the pharmaceutical, life sciences and tech sectors. However, the upside of these industries and tenants cannot be achieved if we remain the most expensive place in the country to do business. The talent, investment capital, facility space and collaborative ecosystems are all here to support these verticals. To remain more than competitive, there must be incentives (local and state) to offset New Jersey’s costs of living and doing business.
Michael Seeve, president, Mountain Development Corp. (Woodland Park)
Companies led by thought leaders are making the most impact on New Jersey’s office market. These firms dedicate significant thinking and planning about their space decisions and how real estate can be a part of their business; they evaluate location, environment, amenities and overall experience, and consider branding and other creative ways to make their space serve additional, accretive purposes. Firms that think deeply about space oftentimes forge long-term, productive and active relationships with landlords who often become partners and enablers in achieving tenant objectives. More so, New Jersey is home to a highly educated workforce, and companies that take advantage of this resident knowledge base play to the strengths of the market. It creates opportunities for people to work productively and not only build wealth and careers, but a connection to the communities in which they work. Achievements in technology, biosciences, law, engineering, marketing and commerce pioneered by New Jersey firms and residents are a source of pride for everyone in the state. And they give rise to an ever-increasing cycle of additional business, services and activities.
Kenneth Pasternak, chairman, KABR Group (Ridgefield Park)
We have seen a dramatic demand from international tenants and Fortune 1000 companies. Each comes looking for three uniquely New York City-area attributes offered by northern New Jersey locations:
These tenants insist on being in a gateway world class city that possesses leading-edge business thinkers providing game-changing dialogue.
Customers value being near providers who are innovators in their business area.
Third, global leaders need to be the employer of choice to the best and brightest of millennial employees. These elite educated employees overwhelmingly chose to join select organizations that are providing unparalleled career growth along with transit-oriented lifestyles. These locations possess education, cultural and entertainment resources unique to only a handful of cities in America. Our North Jersey properties have been the winning landlord to these tenants with our strengths answering their needs.
