Industrial rents hit record highs in New Jersey for the first half of 2021, according to a report released this week by CBRE Research.
Central New Jersey saw the largest increase among Northeast Corridor markets, with industrial rental rates climbing nearly 50% when compared with the first half of 2019, the report said. That’s nearly 20 percentage points higher than the average for the entire corridor.
Rents for warehouses in Central New Jersey that are 100,000 square feet or larger rose from $8.05 per square foot in the first half of 2019 to $12.02 per square foot in the first half of 2021.
At least some of that growth was driven by companies that sought developable land south of northern New Jersey, where rents are lower and land is more readily available, the report said.
Northern New Jersey wasn’t far behind, however, with industrial rental rates rising 31% over the same time period.
The vacancy rate within the Northeast Corridor also hit a new record during the first half of 2021, plummeting more than 70 basis points, to 3.3%, the report said.
The report highlighted several factors that contributed to the growth, including supply chain constraints, delayed construction timelines and upended budgets that resulted in low availability and contributed to bidding wars.
But the primary driving force was a shift to e-commerce, according to Madeline DeCerbo, NE logistics field researcher at CBRE and author of the report.
“The COVID-19 pandemic accelerated e-commerce adoption by U.S. consumers,” DeCerbo said. “Given the portions of the U.S. and Canada that are served by logistics operations within the Northeast Corridor, demand for logistics space grew at a faster pace than developers could supply, creating the perfect environment for rent growth.”