After more than a decade in the doldrums, Northern New Jersey’s corporate real estate market is starting to show signs of strength. Everyone is starting to feel better and the business mood has improved. Specific submarkets are experiencing an uptick in demand and landlords are starting to leverage that demand to hold the line on pricing and cut back on concession packages.
If history is any indicator, we’ll soon be seeing long-term deals getting done across the market. And whenever I see confidence start to tick up, I am reminded of Warren Buffett’s quote in his 2008 NY Times Op-Ed, and specifically his line, “Be fearful when others are greedy, and be greedy when others are fearful.”
2009-11 was the time to sign long-term leases. Landlords were getting aggressive with their incentive packages and were reducing rates to secure or retain tenants. Leases included generous workletter allowances, huge chunks of free rent, and rental rate reductions just to stabilize the tenant roster.
Conversely, an accelerating market is not the time for a tenant to sign a long lease and take more space than necessary. I understand the temptation to buy into those good feelings and bite off a huge lease term. An accelerating market is the time to examine options, look for opportunities, and stay flexible. If business expands as anticipated, there will be always be options to accommodate that growth.