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Economic shift from suburbs to cities

Eric Sucar
A skier makes his way along Asbury Avenue in Asbury Park during the first major snow storm of the year on January 23.

Staff Writer

NEW BRUNSWICK — The technology boom of the 1990s has essentially uprooted the suburban office agglomeration of the 1980s that drew people to suburban New Jersey in the first place.

James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said in the 1980s, New Jersey was ranked as the fifth largest office market in the country.

“It’s no longer a key dynamic [to economic success],” he said. “Twenty-five to 35 years ago was the pre-Internet era, and now these office buildings are becoming obsolete.”

Hughes assessed Middlesex County’s 2016 economic prospects as part of a new economic development series sponsored by the Middlesex County Regional Chamber of Commerce on Jan. 22 held at the Hyatt Regency.

In this day and age, Hughes said, it is a harsh economic reality that these grand office buildings were too much of a real estate footprint, including the former Merck headquarters located in Whitehouse Station, Hunterdon County, which is now closed and for sale, and the former Aetna headquarters in Middletown, Connecticut, which has been demolished.

“The Aetna office park was the crown jewel of the area,” said Hughes, who said the main jobs were processing and filing records. “Information technology [happened] and now it has become 260 acres of open space.”

Hughes said FedEx is investing $500,000 and putting a distributing center on the former Aetna site that will bring in 500 jobs. Something to think about, he said, is the site was once a 1.3 million square-foot office park with 5,000 jobs.

“Now the town is just happy to bring in revenue from the site,” he said.

From the 1950 to the 1980s, Hughes said the trend saw people moving out of cities into the suburbs of New Jersey, Pennsylvania and Connecticut because of the growing office building market. Now, he said millennials or members of Generation Y are charting their own course and moving out of the suburbs into the cities.

“The baby boomers couldn’t wait to get out, and the millennials can’t wait to get back in,” he said.

The New Jersey economy saw a complete transformation from manufacturing factories to office buildings from 1950 to 1980.

Hughes showed data exhibiting areas where population has declined from 2010 to 2014 including Sussex, Warren, Hunterdon, and Monmouth counties as well as the Poconos in Pennsylvania and counties in upstate New York.

Hughes said the post-suburban future is working on how best to repurpose the grand office buildings.

He said despite the office building market downturn, New Jersey is bouncing back with roughly 7,500 jobs left to recover after the 2009 recession.

In 2009, some 241,000 jobs were lost in the Garden State. Since then 233,500 jobs were recovered and/or gained.

Unlike the recessions of the past, the country saw 55 percent of service jobs lost, which is in large part due to the technology boom of the 1990s. In past recessions, most jobs lost were in the manufacturing sector.

“This was the first time we saw a loss of service jobs, which would have been eliminated anyway because of IT,” he said. “In the 1980s and 1990s, we saw high paying middle skilled positions that IT has now eliminated. When we say receptionist or file clerk, the younger generation will not know what we are talking about.”

Hughes said in office buildings now, economists see more creative work-related jobs.

The 2016 Economic Outlook is part of the Middlesex Chamber’s continued analysis of the growth and economic strength of the Central Jersey region, which has emerged as among the most culturally and economically diverse parts of the state.

“There are so many pieces to the puzzle when it comes to continuing a successful and robust economic landscape here in Middlesex County,” said Lina Llona, president of the Middlesex County Regional Chamber of Commerce. “We look to leaders like Dean Hughes for providing a big-picture policy perspective so we can take his insights and act locally.”

Llona added that combined with the region’s extensive transit and roadway access, the Middlesex County area is particularly attractive to current and prospective employers.

Hughes is director of the Rutgers Regional Report, which has produced more than 40 major economic, demographic, and real estate studies on New Jersey and the broader metropolitan region.

He is a nationally recognized academic expert on demographics, housing, and regional economics and is author or co-author of 34 books. He has provided extensive budgetary and economic testimony before many New Jersey State Legislative committees, and has provided numerous policy briefings both in Washington and Trenton on demographics, housing and the economy.

He has served on numerous commissions and task forces, including the NJ Governor’s Commission on Jobs, Growth and Economic Development; the Economic Advisors Board of the Council of the City of New York; the NJ Governor’s World Class Economy Task Force; and the NJ Governor’s Property Tax Commission.

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