NJ TRANSIT HUB PERSPECTIVE | MID-YEAR 2019
Princeton
Unlike other transit hubs in New Jersey, Princeton Junction
access is via car or shuttle from either the Carnegie Center
area at Alexander Road or Princeton Forrestal Center. Access
to the train is extremely important to many of the office
tenants looking in Princeton due to its proximity to Manhattan,
Philadelphia and the Northeast Corridor. BlackRock, for
example, maintains is own private van service to and from the
Princeton Junction Station. The Hamilton Transit Center, on the
other hand, is directly across the tracks from American Metro
Center and is very accessible by walking.
While vacancy at year end 2016 was at a healthy 16.5 percent, it
increased to as high as 29.0 percent during 2018. At first glance
this would indicate an unhealthy trend and a softening market.
In reality, Bristol-Myers Squibb (BMS) vacated 660,000 square
feet at 777 Scudders Mill Road upon relocating its operations
into a new owned facility, while several tenants moved from
Class B to Class A buildings. Most notable being Integra
LifeSciences, which vacated more than 100,000 square feet after
relocating into 167,000 square feet at 1100 Campus Road in
Plainsboro. In addition, Reed Smith moved out of 47,000 square
feet at Princeton Forrestal Village and absorbed 40,000 square
feet in Carnegie Center.
In both instances, the spaces vacated were not considered
“main stream Class A” space. However, in the 18 months since
BMS moved out of 777 Scudders Mill Road, two leases have
been executed: Genmab leased 90,000 square feet and Croda
leased 60,000 square feet. The new ownership of 777 Scudders
Mill Road is creating a corporate campus to rival Carnegie
Center, but on a smaller scale. Also, there is substantial activity
with tenants in the 25,000-square-foot to 50,000-square-foot
plus ranges, many of whom are life sciences/pharmaceutical
companies either locating/relocating their operations to the
Princeton area or expanding their operations.
The Princeton transit hub market exhibited signs of
stabilization during the first half of 2019. In addition to
renewals/extensions completed in Carnegie Center totaling
nearly 200,000 square feet, two subleases were signed for
close to 80,000 square feet. With a vacancy rate less than 15.0
percent, there continues to be tenant interest in the limited
availabilities at American Metro Center.
While the current vacancy numbers, in a vacuum, don’t
necessarily support what we’ve outlined above, the activity,
the trends and the velocity, coupled with the fact that Boston
Properties’ Carnegie Center, a 2.2-million-square foot Class
A+ office park, is achieving taking rents in the mid $30.00
per square foot range, indicate that the Princeton market,
especially near its transit hubs are on an upswing. We expect
to see additional leasing velocity, which will maintain upward
pressures on rental rates over the next 12-18 months.
Net new supply
Princeton is located nearly equidistant between New York City
and Philadelphia. Most of the office buildings in this market
were developed along U.S. Route 1, which runs to the east of
the downtown area. Passenger rail service is accessible via
the Hamilton and Princeton Junction train stations located
on Amtrak’s Northeast Corridor. The Hamilton Transit Center
opened in early 1999 as a stop for New Jersey Transit trains
and is located next to a former American Standard factory that
was converted into an office campus called American Metro
Center. Princeton Junction serves both New Jersey Transit
and Amtrak commuters. Rail service from Princeton Junction
to the Princeton University campus is provided by a 2.8 mile
commuter line called the Dinky.
Net absorption
total vacancy
100,000 30.0%
-100,000 25.0%
-300,000 20.0%
-500,000 15.0%
-700,000
2015
2016
2017
2018
Mid-2019
10.0%