WTC-Related Office Space Leases Estimated at 3.4M-SF

JERSEY CITY-The run on office space in the Garden State continues. GlobeSt.com estimates, based on data provided by several real estate firms, including Insignia/ESG, Newmark JGT, SJP Properties, online brokerage service TenantWise, and others, that companies displaced by the terrorist attack of September 11 have taken control of 2.4 million sf of vacant space in New Jersey. Others have backfilled an estimated one million sf, much of which, until three weeks ago, was destined for the sublet market in a shrinking economy.

Put another way, 3.4 million sf of mostly prime office space is no longer available in New Jersey. And of the total, more then one-third, 1.2 million sf, has been taken off the market here in Jersey City. Also, fully two-thirds of the total amount has been taken by just five organizations.

The largest amount in New Jersey has been grabbed by the most aggressive of the post-tragedy space hunters, American Express. The credit card and financial services company has taken nearly 700,000 sf of unoccupied space in Parsippany, Short Hills and Jersey City. A close second is Merrill Lynch, which has taken a total of 675,000 sf at three different locations in Franklin Twp., Somerset County, plus a 30,000-sf block of space in Weehawken, which is just north of Jersey City.

Also, the Port Authority of New York and New Jersey, which owns the devastated World Trade Center site and was based there, has leased about 330,000 sf of space, about equally divided between Jersey City and two of the Gateway Center towers in downtown Newark. Finally, both Dow Jones and Lehman Brothers have taken 300,000 sf of space in Jersey City.

As far as the long-term impact on the market, a survey by TenantWise suggests that many of those firms that have brought operations and jobs to New Jersey may be here to stay. “In initial inspection of tenantsindicates that a large number are planning on returning to their former offices once they are repaired, [but] a closer inspection reveals that the largest of these tenants, accounting for 44% of the square footage of the damaged properties, have also made provisions to leave Lower Manhattan,” according to the TenantWise report.

And while a lot of that tenant movement has been to locations elswhere in Manhattan, mostly Midtown, as well as New York State and Connecticut suburbs, at least half of the space grab has reached across the Hudson River into New Jersey. “While it is clear that [displaced] companies are supportive of the State of New York in its time of crisis,” according to the TenantWise report, “it is also clear that many are not making plans now to return to Lower Manhattan.”