New Jersey’s industrial real estate market is showing strength with leasing velocity increasing by approximately 23 percent year-over-year, according to CBRE‘s Q2 2018 industrial market report.
The report said leasing velocity in the second quarter was at 5.9 million square feet. Third-party logistics providers, or 3PLs, drove the market, CBRE said, along with apparel manufacturers and distributors. As a result, supply shortages remained even with a construction pipeline of 11.4 million square feet across 31 buildings.
Even with leasing velocity at 5.9 million square feet this quarter, it was down 4.9 percent from the first quarter, CBRE said.
Net absorption was positive in the second quarter at 528,000 square feet. North Jersey was the leader with more than 1.3 million square feet of absorption in the quarter, bringing its total net absorption to a positive 283,000 square feet. In Central Jersey’s second quarter, there was a negative 787,000 square feet. However, a strong first quarter helped Central Jersey post positive numbers (783,000 square feet net absorption) during the middle of 2018.
“Demand for large blocks of quality industrial space continued to outstrip supply during the second quarter of the year despite a healthy dose of new construction,” said Thomas Monahan, vice chairman, CBRE. “Nearly 2 million square feet of space was delivered in the second quarter, 64 percent of which was pre-committed. Further inhibiting market equilibrium is the ongoing trend of construction pre-leasing, with 47.2 percent of new product currently under development being spoken for prior to delivery.”
Strong demand and lack of supply helped push asking rents to an all-time high of $7 per-square-foot, an increase of 8 cents per-square-foot quarter-over-quarter and 48 cents per-square-foot year-over-year.
In terms of investment, the market had $182 million in total sales, representing more than 1.9 million square feet, resulting in an average sale price of $97 per-square-foot. These figures were down from the previous quarter with sales volume at $289 million for more than 3.4 million square feet at an average of $83 per-square-foot.