A few days ago, UBS made headlines when it announced its interest in moving back to Manhattan. While the cynical among us wondered if this was just a ploy to gain more favorable tax breaks by playing Connecticut off of New York, company sources claimed the move is necessary in order to attract young talent. Stamford, after all, isn’t exactly a happening city for good minds right out of college.
In New Jersey, a different story is unfolding: Transit-oriented development has become all the rage. Dana Rubinstein reports in The Journal today:
As New Jersey slowly emerges from the economic downturn, its office market is beginning to transform into one concentrated around train stations. Businesses have been leasing space in areas served by train stations at a higher rate than those only accessible by car, according to real-estate firms. The trend reflects demographic shifts and higher gasoline prices as well as changes in worker priorities.
For example, businesses are beginning to recognize that many employees care less about living in sprawling estates and more about living in diverse areas with restaurants and entertainment within walking distance, notes Robert Puentes, a senior fellow at the Brookings Institution Metropolitan Policy Program. “All these things are starting to add up and companies are very attuned to it,” he says…
The average vacancy rate in so-called transit hubs in New Jersey was 14.7% in the first quarter of this year, compared with 29.7% in areas not considered transit hubs, according to real-estate brokerage Jones Lang LaSalle. The report defines transit hubs as the 40 million square feet comprising office space in Newark, Elizabeth, Jersey City, Hoboken, Paterson, East Orange, New Brunswick, Trenton and Camden, Morristown and Metropark, all cities with rail service.
At the same time, asking rents in transit hubs were higher, averaging $27.43 compared with the rest of the suburban market’s $23.51, according to the Jones Lang LaSalle report. Since 2009, more than 20% of all leasing has occurred in the transit hubs, compared with 15 percent before 2009. Further, of the 52 leases larger than 100,000 square feet signed in New Jersey since 2008, 22 of them were in transit hubs.
Panasonic recently made headlines when it decided to move from Secaucus to Newark. While the decision has been driven, in part, by a generous tax credit, company officials say accessibility played a role in the move as well. “We have literally 1,000 people driving cars every day,” Peter Fannon, a company VP, said. “The key element for us, which really brought the focus back to Newark, were the environmental benefits, specifically the ability to be in an urban center where there are housing, restaurants, hotels, and most importantly, mass transit facilities, all within a three- or four-block radius of our new location.”
With these trends emerging and with policies in place to encourage hub-based growth and transit-oriented development, it would be an ideal time for New Jersey to move forward with a plan that will greatly improve trans-Hudson commuter rail access while cutting down travel time. Unfortunately, private businesses and state leaders aren’t seeing eye-to-eye. As development policies and economic realities push TOD, the ARC Tunnel plans, which will look more and more necessary as time passes, remain dearly departed.