Six months into this year, North and Central New Jersey’s industrial market is still showing positive trends, despite the lack of existing modern warehouse space, according to Cushman & Wakefield’s most recent report.
The East Rutherford-based firm reported strong second-quarter absorption rates, vacancy at a historic low and above-average asking rents.
Over the past three months, transactions in the 100,000 to 300,000 per-square-foot range fueled demand, accounting for nearly one-third of approximately 5.5 million square feet leased, the firm reported. Mid-year leasing total is at 11.9 million square feet. The biggest transactions of the quarter included Clutter.com’s 449,890-square-foot lease at 1065 Cranbury South River Road in South Brunswick, One Stop Logistics’ 369,294-square-foot lease at 83 Stults Road in South Brunswick and FREEZE’s sale/leaseback of 318,389 square feet at 473 Ridge Road in Dayton.
“In sum, tenants absorbed 3.7 million square feet of industrial space in New Jersey during the second quarter, bringing year-to-date net occupancy gains to 7.5 million square feet,” Andrew Judd, Cushman & Wakefield’s New Jersey market leader, said.
“Space options have become limited for larger warehouse tenants,” Jason Price, director of Cushman & Wakefield’s tri-state suburbs research, said. “Yet while this has dampened new leasing somewhat, renewal activity surged to 3.4 million square feet during the second quarter. In fact, 15 tenants renewed leases larger than 100,000 square feet — marking a 61.9 percent quarter-over-quarter increase.”
Cushman & Wakefield said the state’s industrial asking rents pushed higher in the second quarter by 2.8 percent to $8.44 per-square-foot. In warehousing and distribution, the average rental rate exceeds $8 per-square-foot for the first time ever on record, the firm reported. Meanwhile, asking rents for Class A warehouse space is priced at almost 10 percent over the state’s market average.
In terms of new product, the firm reported nearly 5.5 million square feet of new industrial space has been built so far this year, of which 79.2 percent has been leased. The biggest construction drivers this year so far included Wayfair’s 1.3 million-square-foot facility in Cranbury and Best Buy’s 725,400-square-foot warehouse in Piscataway. There is currently 6.5 million square feet under development.
“The majority of the sites under construction in New Jersey are slated to deliver in the second half of 2018, which should push the annual completions total to a new historic high,” Price said. “The Upper 287 Corridor, Port Region and Exit 8A are all expected to see new developments break ground in the immediate future, as the need for Class A warehouse space continues unabated.”