Hard hit by the recession and bad real estate loans made in the '80s, banks are regaining their footing and slowly returning to the commercial marketplace. The evidence is a spate of lease and sales transactions over the last year.
"It is only the tip of the iceberg as the banking industry, between expansions and contractions, continues to change itself," said Thomas V. Bermingham, executive director at Edward S. Gordon Co. of New Jersey, a brokerage in Saddle Brook.
Mergers, acquisitions, consolidations and expansions are stoking much of the activity as banks look for space to meet their reconfigured needs. Over the last four years 71 state-chartered commercial and savings banks and savings and loan institutions were acquired or closed, according to figures from the state's Department of Banking.
In one of the larger deals, Margaretten Financial Corp., a mortgage banking company recently acquired by Chemical Banking Corp. of New York, is moving from Woodbridge and Perth Amboy to an Edison office building, expanding its space by more than a third, to 125,000 square feet.
In South Brunswick, United Jersey Bank has leased 94,685 square feet in the Dayton Corporate Center to accommodate about 450 employees involved in a merger last July of it and two sister banks, United Jersey Central and United Jersey South. All are subsidiaries of UJB Financial Corp., based in West Windsor.
And United National Bank will relocate its headquarters from Plainfield to a 70,000-square-foot building now being built in Bridgewater, which it will lease.
In the only sales transaction, Hudson United Bank, which acquired eight banks in four years, bought a 64,350-square-foot building in Mahwah for its new headquarters.
Projections are that the activity is likely to continue because some of the state's six larger banks, rumored to be in the market for space, have yet to make their moves. Brokers say banks are also looking for places to set up emergency computer back-up centers.
They also say that an interstate banking bill recently approved by the Senate and sent to President Clinton for signing may provide yet another spur to consolidations or expansions. The bill would eliminate the remaining barriers to interestate banking, as well as a requirement that banks operate separate subsidiaries in each state.
Properties that became available when banks that owned or occupied them failed are also being taken over and leased to new tenants. One is the 304,000-square-foot former headquarters in Livingston of the now defunct Howard Savings Bank, the largest bank to go out of business in New Jersey.
All this adding and subtracting of space, brokers and analysts say, has had a positive, but modest, impact on the market. Still, they say, no new construction is expected.
"We're not seeing a whole lot of closings of free-standing buildings and those that do become available are being snapped up," said John Young. He is a vice president and regional manager of the Northeast office of the Satulah Group of Atlanta, which helps banks consolidate their operations.
Donald P. Eisen, a managing director at Cushman Wakefield, the national brokerage with offices in East Rutherford, added that the "market is improving and improving quickly for prime space." The oversupply, he said, is in older buildings.
The brokerage says the vacancy rate for the state's 11-county northern and central office market is 20.96 percent; last year it was 22.6 percent. Much of the space absorbed was Class A, which continues to dwindle. And while average asking rents, now at $17.79 a square foot remain low, concessions such as rent-free periods are disappearing. …