New Jersey’s industrial market has proved resistant to the many uncertainties tied to the COVID-19 pandemic, according to CBRE‘s Q2 2020 industrial report. In all, every metric of the market saw quarterly improvements.
Leasing activity for the second quarter totaled 5.2 million square feet, a 36% increase from the last quarter, but 23% less year-over-year and 20% less than its five-year quarterly average.
The average asking rent for all classes in North and Central Jersey were up by 1.4% year-over-year to $7.49 per-square-foot, effectively unchanged from Q1 2020’s $7.52 per-square-foot. In North Jersey, the average asking rent was also unchanged at $7.99 per square foot from Q2 2019. In Central Jersey, the average asking rent stood at $6.89 per square foot, the same figure from Q1 2020 but 3.5% greater year-over-year.
The availability rate is back to 6% after a 15 basis point drop from Q1 2020 and 27 bps from Q2 2019. The rate is now just 10 bps from the all-time low set in Q3 2019 of 5.9%.
By industry, e-commerce had the most leasing activity in Q2 2020 —with eight leases signed totaling 2.2 million square feet — as the pandemic forced more people to shop online. The bounce-back from Q1, according to CBRE, suggests the market didn’t decline, it paused.
“The strong leasing activity during the second quarter proved once again that the industrial market in New Jersey is well positioned to withstand any disruption caused by the global pandemic,” Larry Schiffenhaus, senior vice president, CBRE, said. “In many cases the market even continued to grow as e-commerce and logistics companies required additional space to meet consumer demand.”
There were 20 leases of more than 100,000 signed in the quarter, compared to 14 in the first, but the average deal sized increased to 253,000 square feet from 193,000 square feet.
Some notable deals in the quarter include:
- 953,595-square-foot lease, e-commerce tenant, 343 Half Acre Road in Cranbury;
- 610,949-square-foot renewal, LT Apparel, 301 Herrod Blvd. in South Brunswick;
- 318,000-square-foot lease, Salson Logistics, 2801 Route 130 in North Brunswick;
- 296,000-square-foot renewal, Anixter, 7 Santa Fe Way in Cranbury;
- 290,385-square-foot lease, e-commerce tenant, 200-250 Gregg Street in Lodi;
- 289,698-square-foot lease, e-commerce company, 8 B Court in South Edison.
As a result of the major leases, net absorption was a positive 3.6 million square feet, the 14th straight quarter of positive absorption.
On the investment sales front, demand has remained strong. The market saw an increase of 15% in transaction volume to $277 million quarter-over-quarter.
New construction activity was halted in the quarter due to Gov. Phil Murphy’s executive order on April 10 that stopped all nonessential construction activity. The order was lifted on May 18 and at the end of the quarter, 42 buildings totaling 15.4 million square feet were under construction, up from 38 buildings and 14.5 million square feet in Q1.