Despite the state remaining in partial lockdown and people working from home more and more, industrial tenants had an active second quarter in New Jersey, according to Transwestern Research’s Q2 2020 New Jersey Industrial Market Report.
The report said with 1.4 million square feet of positive net absorption in Q2 2020, velocity outpaced pre-pandemic Q1 2020 and was on par with the last two quarters of 2019.
As COVID-19 halted construction for much of the quarter (but resumed halfway through), 80% of the quarter’s largest leases were signed at existing structures, resulting in an overall vacancy level of 3.8%, relatively unchanged since Q1. Positive net absorption was seen in 16 of the 25 submarkets in Q2 and in 15 of them year-over-year.
Amazon and food and beverage companies represented nearly two-thirds of leases signed in the quarter. Amazon’s 953,595-square-foot lease in Cranbury was the largest of the leases, and three-quarters of leases over 100,000 square feet were along the New Jersey Turnpike.
There was plenty of activity noted in new developments under construction, with Mark Anthony Brands leasing 419,549 square feet of space at Bridge Point 78. In total, 11.6 million square feet is under construction, more than double the level it was a year ago, but slightly less than Q1 2020.
Rents increased for the 20th time in a row due to high demand for new construction. For the first time on record, the average rent for industrial space surpassed $9 per-square-foot to $9.05 PSF. Quarterly increases were seen in 80% of the submarkets, with four averaging more than $10 PSF. Overall, the average asking rent increased by 7.5%, the highest year-over-year uptick since Q2 2019.
As a result of buyers being cautious, total sales volume was at its lowest level in four years. The largest sale was BentallGreenOak’s acquisition of a 925,000-square-foot warehouse occupied by LG Electronics for $177 PSF.