Transwestern released its national industrial report for the first quarter of 2018, finding New Jersey among the strongest industrial markets in the country.
“Despite challenges due to supply constraints, New Jersey continues to rank as one of the strongest industrial markets in the country. In fact, New Jersey placed in the top five markets nationally for net absorption in the first quarter of 2018. As developers seek secondary and tertiary locations with buildable land, the volume of tenants who remain waiting for these opportunities ensures that the New Jersey industrial market will flourish for the foreseeable future,” said Matthew Dolly, director of research, New Jersey for Transwestern.
The report showed that the U.S. market has had rent gains for six years. It also indicated seven years of steadily falling vacancy rates.
The U.S. market ended the quarter with an average asking rent rate of $6.27 per square-foot, with New Jersey’s asking rate higher at $7.74. According to the report, New Jersey’s asking rents peaked to a record high for the ninth consecutive quarter. All but two of 25 New Jersey submarkets reported asking rents higher than the U.S. average.
The national annual growth rate was also outpaced by New Jersey, 10.9 percent to 10.5 percent, respectively. New Jersey, the report said, had the highest year-over-year rent growth of any large market greater than 400 million square feet.
Overall U.S. vacancy at the end of the quarter was at 4.7 percent. In New Jersey, vacancy improved to a record low for the third consecutive quarter while peaking to a record high rent for the ninth consecutive quarter. As of the first quarter of 2018, New Jersey’s overall vacancy rate was 4.1 percent, with 17 of 25 submarkets indicating lower vacancy rates than the national average.
Forty-one of the 48 Transwestern markets posted positive quarterly absorption, leading to a total of 62.4 million square feet absorbed nationally.
“Although annualized absorption is beginning to trend down, the overall outlook for the sector remains bullish, with 80 percent of our markets posting an increase in asking rental rates,” said Stuart Showers, director of research in Houston.
New Jersey ranked fifth in the U.S. for first quarter 2018 net absorption. The Garden State is one of only five markets with a 12-month net absorption total greater than 10 million square feet.
The sector also showed strength among secondary markets, including a construction pipeline with more than 300 million square feet nationwide.
“Rents are unlikely to flatten until deliveries outpace demand,” Showers said. “And while some investors could retreat from asset prices they believe are nearing a peak in primary industrial markets, there are plenty of opportunities in secondary markets to keep investment strong.”
A high demand for warehouse space near households is also driving the sector, the report said.
“The transportation, logistics and distribution industry continues to be a primary market driver throughout the country,” Dolly said. “The industrial market is working overtime to keep up with consumer demand and the growing impact of e-commerce.”
To see the full report, click here.