Against the odds, New Jersey’s industrial market showed strong leasing activity and climbing average asking rents in the third quarter, according to CBRE’s Q3 2020 industrial report.
Over the past three months, industrial leasing activity totaled 7.3 million square feet, a 40% increase from Q2 2020 and 33% more than Q3 2019. Class A industrial space averaged asking rents at $11.18 per-square-foot, 7% above the average last quarter. For all spaces, the average asking rent was $7.42 per-square-foot, a 1% drop from Q2 2020. The overall availability rate fell in North and Central Jersey fell to 5.8%, a drop of 13 basis points for all classes from the previous quarter and 14 point decline year-over-year.
“New Jersey’s industrial market came back strong after experiencing a COVID-related setback during the second quarter, and proved once again its resiliency even in light of the many challenges still facing our industry,” Larry Schiffenhaus of CBRE said. “The market broke several records during the third quarter, including leasing activity and net absorption, which at 7.2 million square feet far surpassed the 3.7 million square feet in the previous quarter.”
Industry wise, e-commerce led the way with five leases totaling 1.94 million square feet. Consumers are continuing to shop online, despite businesses reopening all over the state. Notable transactions include the 900,022-square-foot lease by an e-commerce tenant in Edison; a 583,376-square-foot renewal by G-III Apparel in South Brunswick; and a 308,550-square-foot lease for TSG Cabinets in Somerset.
New projects were able to come online after COVID-19-related shutdowns halted construction work. In the third quarter, 6.56 million square feet of new inventory hit the market, 80% of which (or 5.2 million square feet) already pre-leased.
New projects also came online during the third quarter after the COVID-related work stoppage temporarily delayed the delivery of some projects. During the quarter, the industrial market saw a record 6.56 million sq. ft. in new inventory hit the market, 80% of which (5.2 million sq. ft.) was pre-leased.
Transaction volume also grew in the quarter to $304 million, a 9% increase compared to Q2. The largest deals were two in the Meadowlands submarket, accounting for 40% of total sales.
“Strong industrial leasing fundamentals in New Jersey continue to attract global institutional investors,” Brian Fiumara, vice chairman, said. “Many of these investors see stability and growth in the market, leading to safe long-term investments.”