Demand for industrial real estate stayed strong in New Jersey in the second quarter, according to a report from Avison Young.
The real estate firm said in its Second Quarter 2021 Industrial Insights Report that annualized leasing activity was 7.8% above the 20-year annual average, and vacancy rates reached a 15-year low of 3.2%.
“The New Jersey industrial market maintained a solid performance throughout the pandemic and continues to be a hotbed for end-users and investors alike,” Jeffrey Heller, principal and managing director of Avison Young’s New Jersey office, said in a prepared statement. “Asking rents have continued their upward trajectory, increasing by 83.3% over the last six years, creating landlord-favorable market conditions that have caused concession rates to steadily decline.”
Big-box demand drove construction activity in the quarter, Avison Young said, with about 47.1% of buildings under construction exceeding 750,000 square feet in size.
Lack of supply was a challenge for the sector, however, despite $3.9 billion in investment volume since the start of 2020.
“While the industrial sector’s strong fundamentals accelerated during the pandemic (and) continue to lure investors, the lack of supply on the sales side may prevent dollar volumes from escalating in the near term,” Jason Bloom, a Northeast insight analyst in the New Jersey office, said in a statement. “This has also translated into higher valuations, which increased by 31.4% since the first quarter of 2020.”
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