New Jersey’s industrial sector is showing continuous growth despite a lack of space, according to Transwestern’s Second-Quarter 2018 Industrial Market Report.
Industrial rents have set a record high, Transwestern said, for 10 consecutive quarters. This quarter’s average asking rent was $7.80 per-square-foot.
“With limited availability of space, the Garden State’s industrial market is not only setting records in asking rents, it’s also establishing new highs in net absorption levels,” said Alex Previdi, managing director at Transwestern. “Even amid this unmistakable, market-wide paucity of space, we’re also seeing a growing number of redevelopment projects that are either breathing new life into older industrial properties or are repurposing office and other space for industrial use.”
Rental growth occurred broadly throughout the state, with increases seen in 14 of 25 submarkets by the end of the second quarter. The report said asking rents peaked in seven submarkets: Bergen Central, Exit 12/Carteret-Avenel, Exit 13/Linden, Exit 14/Newark East, Fairfield, Morris West and Route 280/Suburban Essex.
The industrial sector in New Jersey absorbed 14.7 million square feet in the past 12 months, compared to 13.3 million in the 12 months ending in the third quarter of 2003, the highest since on record.
The sector absorbed 4.8 million square feet of industrial space in the second quarter, which is the third-highest level recorded.
The report indicates low levels of available space, with 3.9 percent level of vacancy. Eight submarkets have a vacancy rate below 3 percent.
“New Jersey’s industrial sector is firing on all cylinders, not only as it pertains to record levels of demand, vacancy and asking rents, but also across the entire terrain for warehouses, distribution centers and manufacturing buildings alike,” said Transwestern’s New Jersey Research Director Matthew Dolly. “Continued challenges include assessing transportation costs and labor shortages for tenants, while for developers, convincing municipalities that industrial development is perhaps the best investment for their communities.”