Last week, I participated in a market discussion with a team of CBRE colleagues and a prominent landlord in the market regarding Parsippany. The conversation was upbeat and positive, but in sharp contrast to where the market was ten years ago.
As recently as 2007, the vacancy rate in Parsippany was sub-20%. Today it is 30.2% with an average asking rental rate of $23.28/sf.
Historically, I would explain the better submarkets in New Jersey as those at the junction of two or more major highways while the weaker submarkets were serviced by only one highway. After all, everyone in New Jersey drives to work.
Parsippany sits at the junction of Routes 80, 280, 287, 202, 206, 46, and 10. There’s great access traveling north and south, as well as east and west. Many companies located there to take advantage of the proximity to New York or Newark, while still being able to hire from points west.
Today, the submarkets with rail access dominate those without. And while most in New Jersey continue to drive to work, the densification of most office spaces are driving companies to locations either with abundant parking or some sort of public transportation alternative.
Parsippany has no rail access to speak of. If a tenant needed 100,000 sf in Parsippany, they would have 14 viable options to tour and there’s over 3.3m square feet available on a direct basis.
As one colleague in last week’s meeting pointed out, the stock of buildings is older as well. The average age of a building in Parsippany is 27 years old. While some of these buildings can accommodate the needs of today’s office tenants from an infrastructure standpoint, very few can handle the dense parking.
Will Parsippany make a comeback? With almost second-to-none highway infrastructure, I do think we will see vacancy rates decline in the coming years. However, that will be from a combination of office absorption, as well as the adaptive reuse of aging buildings.