The United State’s industrial market has benefited from high port volumes, positive absorption and low vacancy rates during the third quarter of 2018, according to Transwestern‘s third-quarter industrial outlook.
The report indicated 35 of 47 markets had positive absorption in the third quarter of this year, while 44 of 47 had positive absorption over the past 12 months. There was also year-over-year rent growth in 43 of the 47 markets.
“High-quality infill remains in high demand by investors, causing average rent to blow by the $6 per-square-foot threshold,” Matthew Dolly, research director in New Jersey. “While construction continues at an aggressive pace, it can’t keep up with the red-hot demand. As a result, we’ve seen the U.S. industrial vacancy rate drop 300 basis points in the past five years.”
As for New Jersey, a secondary coastal port market, which the report said experienced “tremendous rent growth”:
- Placed in Top 3 markets nationally for total net absorption;
- Ranked No. 4 for Q3 net absorption;
- Ranked No. 8 for supply currently under construction;
- Ranked No. 11 for vacancy rates;
- Asking rents peaked to record high for 11th consecutive quarter;
- All but one of 25 submarkets reported asking rents higher than U.S. average;
- Vacancy decreased for 13th consecutive quarter;
- Asking average rent of $7.80 per-square-foot was 29 percent higher than the U.S. average of $6.05 per-square-foot as of Q2 2018.
- Ranked No. 8 for industrial product under construction;
- 17 of 25 submarkets have lower vacancy rates than the U.S. average.
“The expected growth in online holiday shopping bodes well for distribution and e-commerce, but we’re also seeing manufacturers and assemblers signing leases, underscoring the overall strength of the sector,” Sandy McDonald, research director in Chicago, said. “If there is any reason to be cautious, it would be concerning the ability of some markets to attract and retain large-capacity tenants for new construction outside the inner core.”