What is now New Jersey was originally inhabited by the Delaware tribe of Native Americans more than 10,000 years ago, and it was colonized in the 1600s by Dutch, Swedish and Finnish settlers. Following the Civil War, New Jersey was a hotbed for the Industrial Revolution and further immigration growth. The Garden State (New Jersey’s nickname) rebounded from the Great Depression by becoming a hub for electronics and chemical manufacturing during World War II.
Today, the Garden State has a robust economy fueled by several industries, including pharmaceuticals and life sciences, financial services, advanced manufacturing, information technology, and transportation and logistics. About 15 percent of the state’s population is 65 or older, driving demand for health care services. New Jersey is the home base for pharmaceutical giants such as Bayer Corp., Johnson & Johnson, and Merck & Co.
Although its post-recession recovery has lagged behind neighboring New York, figures from the Federal Reserve Bank of New York show the Garden State’s economy expanded by 4 percent year over year as of this past July, an 18-year high mark for growth. New Jersey’s median household income increased to $80,088 in 2017, nearly $20,000 higher than the nationwide median income, according to the U.S. Census Bureau. Median wages dipped slightly from 2016 to 2017, however, and about 10 percent of the state’s residents live below the federal poverty line, a share that has grown since 2008.
Gov. Phil Murphy has voiced concerns about the state’s future, noting that New Jersey retains a relatively low percentage of its college graduates as workers, and its pension and health-benefits liabilities for public workers stand at $150 billion, nearly four times higher than the state budget. By 2025, Murphy plans to add 400,000 jobs in New Jersey, increase its venture-capital investments by $625 million and reduce the poverty rates in the state’s largest cities.
As of this past September, New Jersey’s largest employment sectors were trade, transportation and utilities; education and health services; and professional and business services, the U.S. Department of Labor reported. New Jersey’s fastest-growing employment sector at that time was leisure and hospitality (up 2.7 percent year over year). The construction sector, however, lost 6.1 percent of its workforce.
Avison Young, a commercial real estate services company, reported that New Jersey’s industrial-property vacancy rate declined from 4 percent to 3.4 percent year over year in third-quarter 2018. The company also reported that retail-property vacancy rates decreased from 5.3 percent to 4.9 percent during the same 12-month period.
New Jersey office market
Avison Young’s third-quarter 2018 office-market report shows that the Garden State’s vacancy rate of 15 percent and average asking rent of $27.51 per square foot were virtually unchanged year over year. The report states that a gasoline-tax increase that went into effect this past October may impact commercial real estate by increasing shipping costs for industrial tenants and shifting more office tenants closer to mass-transit centers.
The Wall Street Journal reported that New Jersey posted its lowest office-vacancy rate in nine years during first-quarter 2018, but that was largely due to inventory declines. About 1.7 million square feet of office space — much of it Class B space in the northern market of Parsippany — is being redeveloped. Tenants appear to be moving away from outdated, suburban office parks and toward Class A space near mass transit, retail, restaurants and other amenities.
Focus: Life sciences
According to Choose New Jersey Inc., a nonprofit economic development organization, the life-sciences industry — which includes a number of biopharmaceutical and medical-technology companies — employs more than 117,000 people and contributes more than $47 billion annually to the Garden State’s economy. No other state employs more biochemists and biophysicists, and companies with a presence in New Jersey were responsible for half of new drug approvals through the Food and Drug Administration in 2017.
In addition, Princeton University and Rutgers University support many private-sector research efforts, including the world’s largest university-based cell and DNA storage center at Rutgers. Pharmaceutical companies with a footprint in the state include Bristol-Myers Squibb, GlaxoSmithKline, Pfizer and Teva Pharmaceutical Industries.
The Garden State’s unemployment rate at the end of 2012 was 9.2 percent, 1.3 percentage points higher than the national rate at the time. Since then, however, New Jersey has largely mirrored the nationwide drop in unemployment rates, with its 4.1 percent figure this past October less than half a percentage point higher than the national rate.
According to a report from the New Jersey Department of Labor and Workforce Development, the state’s employment base expanded by 68,500 jobs year over year as of this past October. Some economists and policy experts, however, believe New Jersey is in an unsustainable bubble that may result in significant layoffs in 2019. Murphy, who took over as governor in January 2018, was unable to immediately implement a $15 minimum-wage proposal, although the state’s minimum wage was set to rise by 25 cents, to $8.85 an hour, at the start of this year.
What the locals say
“New Jersey is within 24 hours of one-third of the country’s population, and businesses are experiencing steady demand along with the recent tax cuts. As such, warehouse properties are enjoying strong demand, not only for last-mile distribution centers, but as spacious, easily accessible places to collect materials and inventory, work and ship out product. … Class B and Class C multifamily properties offer clean, affordable places to live. Vacancy [rates] continue to be below 5 percent at these properties and rents are rising, with no concessions being offered.”
Senior vice president, Spencer Savings Bank
3 Cities to Watch
With a population of 67,000, Bayonne is one of New Jersey’s fastest-growing cities, registering a 6.6 percent increase in population between 2010 and 2017. According to 6sqft, a real estate news website, the average home in the city sells for about $400,000, about half the market rate of nearby Jersey City. The city touts its walkable neighborhoods and light-rail stations with quick access to New York City. Bayonne is the third-largest city in Hudson County, which boasts major employers such as the U.S. Postal Service, Goldman Sachs and Hanover Direct Inc.
New Jersey’s largest city, with 285,000 residents, Newark is within 20 minutes of New York’s Penn Station via train. It also is home to the busiest container port on the East Coast, boasts more than 50,000 students and faculty at the area’s colleges and universities, and hosts the NHL’s New Jersey Devils. Major employers include Prudential Financial, United Airlines, Horizon Blue Cross Blue Shield and Saint Barnabas Medical Center.
Located about halfway between New York City and Philadelphia, this city of 102,000 is the largest in Ocean County, which includes employers like Six Flags, Meridian Health System and Joint Base McGuire-Dix-Lakehurst. Its fast growth in the last three decades is due, in part, to Beth Medrash Govoha. With 6,700 students, it’s the largest Orthodox Jewish school, or yeshiva, in the country. Lakewood needs to build 26,000 housing units over the next 20 years to keep pace with anticipated growth.
Sources: 6sqft, Asbury Park Press, Avison Young, Bloomberg, Choose New Jersey Inc., Investopedia, Newark Alliance, New Jersey Department of Labor and Workforce Development, NJ.com, NorthJersey.com, State of New Jersey, The Wall Street Journal, U.S. Census Bureau, U.S. Department of Labor