Report Finds N.J. Landlords Offering Higher Concessions than National Average
EAST RUTHERFORD, N.J., June 12, 2018 – Cushman & Wakefield has released a new report, Space Matters, which dives deep into four areas of importance to today’s tenants and landlords. It analyzes the national trends behind office density, amenities, parking and concessions. The firm’s New Jersey research team assembled regional comparison for one of these vital benchmarks.
“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.”
The national report examines in detail four top trends in office space:
- Office density: Occupiers have been allocating less square footage per employee, but that trend is starting to slow down as businesses grapple with the right balance of personal, private, communal, and break space.
- Amenities: Common amenities—such as fitness centers and cost-effective food options—still remain very important. However, there is large opportunity for growth in how technology amenities are leveraged by occupiers and landlords.
- Parking: In many urban sub-markets parking supply is a challenge. Prices have been increasing, and occupiers are looking at creative options to meet the challenge. Also looming in the future is what impact autonomous vehicles may have on parking demand.
- Concessions: Free rent and tenant improvement allowances increased over the past year, but gains were driven by gateway markets in 2017. This trend will spread and some secondary markets will soften as absorption slows down and/or new supply comes online.
NEW JERSEY CONCESSIONS
According to Cushman & Wakefield’s New Jersey research team, the Garden State ranked high among U.S. markets experiencing increased concessions in 2017. The region’s 13.5 percent year-over-year jump is considerably larger than the national average and was only outpaced by San Jose/Silicon Valley and three gateway markets (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,” noted 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.”
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.