Like many of its peers, Cushman & Wakefield found that 2017 was a strong year for industrial real estate, while the office market found less success.
The real estate services firm said the northern and central New Jersey industrial market put up record or near-record results throughout the year, while office activity in the region was soft.
C&W said the state’s industrial marketplace saw 13.5 million square feet of positive absorption, its second-best total ever, giving it a fourth consecutive year above the 10 million-square-foot mark. The sector also saw a record-low vacancy level of 3.8 percent, despite 10 million square feet in new construction completed throughout the year.
“New Jersey saw an industrial sector firing on all cylinders in 2017, approaching near highs in terms of leasing and absorption, and setting a record low in vacancies,” Andrew Judd, C&W’s New Jersey market leader, said in a prepared statement.
New industrial leasing activity posted its third-best total in recent history, at 25.6 million square feet, while asking rents topped the $8-per-square-foot level for the first in recent years, C&W said.
Seven leasing transactions greater than 300,000 square feet were completed in the fourth quarter, the firm said, including three within warehouses yet to be built. It was the 11th straight quarter of 6 million square feet or more in leasing.
The situation was not so rosy for the office market, with vacancy levels ending the year virtually unchanged at 17.6 percent and 2.4 million square feet in negative absorption.
“The office market was not as successful,” Judd said. “Vacancy remained stable, but there was a relative scarcity of large leases, coupled with negative absorption.”
Year-to-date leasing volume was down 26.6 percent, and no fourth-quarter transaction exceeded 100,000 square feet, C&W said.
For the year, the state saw 6.9 million square feet in new office leasing, spread almost evenly between Class A and Class B assets. Asking rents trended higher in the fourth quarter, reaching their highest mark in eight years at $28.37 per square foot.
Cushman & Wakefield does anticipate a strong year in both industrial and office markets in 2018, it said.
“Heading into 2018, we anticipate another year of robust industrial activity, with the office sector poised for a rebound,” Judd said.
Large lease transactions slated for the first quarter could get the year off to a strong start, the firm noted.