As of mid-year 2020, the region’s industrial, retail and office markets have remained relatively flat, according to Colliers International‘s 2020 Mid-Year Industrial, Office and Retail for the Greater Philadelphia region, which includes South Jersey.
Despite the spread of COVID-19, the industrial market remained the same throughout the first half of the year, Colliers said. Without a major disruption of activity, new requirements were down in some market areas, but demand was strong overall. E-commerce and omni-channel retail has been more active than usual and asking rents continue to rise.
Key mid-year takeaways include:
- The overall vacancy rate decreased from 6.4% to 6%;
- South Jersey’s vacancy rate decreased from 5.5% to 3.7%;
- Absorption was up to 10.2 million square feet, more than triple 2019’s mid-year total;
- Asking rents are up 3% to $5.44 per-square-foot;
- New construction hit an all time high of 23 million square feet;
- Sales activity in the first half of the year focused mostly on multi-building portfolios and value-add properties.
The retail market in the first half of the year had a minor increase in vacancy, however, the full impact of COVID-19 has yet to be felt, Colliers said. Grocery chains have been one of the few thriving sectors compared to big box department stores and chains likes Modell’s, Pier 1 and Forever 21. Quick service restaurants are adding more locations to increase deliveries.
- The vacancy rate for the three southern New Jersey counties increase overall from 11% to 11.4%;
- Burlington County’s vacancy rate increased from 10.5% to 13.1%;
- Gloucester County’s vacancy rate was up from 13% to 13.4%;
- Camden County’s vacancy rate decreased from 10.3% to 9.4%;
- The regional vacancy rate increased from 8.8% to 8.9%;
- Stores of all size ranges closed and Colliers predicts there’s more to come in the coming months;
- Multiple large-scale redevelopments were underway at vacant centers/anchors.
Office market trends in the first half of the year were relatively flat, according to Colliers, due to the statewide economic shutdown in mid-March and many companies dealing with the aftermath of working from home scenarios. There’s a huge divide between Class A and Class B office inventory, with Class A occupancy up by 246,000 and Class B down by more than 330,000 square feet.
- The regional office market vacancy rate remained flat in the first two quarters at 12.3%;
- There was a small dip in occupancy due to constrained leasing activity and the delay of planned moves caused by the pandemic;
- The weighted average asking rent increased to $27.47 per-square-foot;
- Investment sales volume was down in the first half, but an increase was seen in user purchases.
- Sales volume was down by more than 40% from the last half of 2019;
- Camden County’s vacancy was up in Q2 after a drop in Q1 (13.4% to 13.5%);
- Burlington County’s vacancy rate was down from 12.2% to 11.6%.