The South Jersey industrial real estate market saw its vacancy rate rise during the fourth quarter of 2018, according to a recent report from Colliers International, with speculative construction and a major availability to blame.
The real estate firm said in its Southern New Jersey Industrial Market report that vacancy grew from 4.1 percent at the end of the third quarter to 4.8 percent, in part due to 528,872 square feet of spec building, plus 870,903 square feet of former Nine West space.
Spec delivery in the quarter included 334,800 square feet in Gateway Business Park in Salem County and 194,072 square feet in LogistiCenter in Gloucester County. Current construction includes 369,000 square feet at LogistiCenter, as well as a 122,000-square-foot speculative expansion in West Deptford.
However, annual absorption came in at 3.7 million square feet, which Colliers called strong. The firm noted, however, that the rate was behind the past three years’ figures. Absorption peaked in 2016 and has been trending downward since, Colliers said.
Amazon represented 45 percent of the 2018 absorption, as the e-commerce giant continued to add fulfillment centers in the area.
On the upside, the average asking rent grew 4 percent in the fourth quarter, reaching $4.73 per square foot, triple net. Burlington County had the largest increase in the South Jersey area, reaching an above-average $5.49 per square foot.
Investment activity increased after a slow Q3, Colliers noted.
Demand for new construction remained strong, especially in Burlington County, the firm said. Leases upward of 300,000 square feet were signed by companies including Veritiv, Trane and Imperial Bag & Paper, among the highlights.
Colliers said build-to-suit activity expected in 2019 includes a 299,750-square-foot facility for GoPuff and two other companies with land under agreement.