Annualized leasing activity in New Jersey’s industrial sector remained steady during the pandemic at 7.3% higher than the previous 20-year average. Absorption through the third quarter has been extremely strong at 12.4 million square feet, which is poised to surpass the 20-year high set in 2018; that’s according to Avison Young’s Third Quarter 2021 Industrial Insights Report for New Jersey released Wednesday.
“While New Jersey’s industrial sector experienced robust leasing activity in the third quarter, reaching 30.6 million square feet in 2021 to date, the sector has not achieved pre-COVID levels due to lack of new inventory,” said Jeffrey Heller, principal and managing Director of Avison Young’s New Jersey office. “Even with the significant scale of industrial projects in the development pipeline, demand is anticipated to continuing exceeding supply.”
The total vacancy rate continued its recent downward trend in the third quarter, falling to a 20-year low of 2.7%. Asking rents increased by 21.6% since the start of the pandemic and have continued a steady upward trajectory while concessions have dipped slightly due to landlord favorable market conditions.
“The New Jersey industrial market’s high rents and low vacancy rates are continuing to attract investors, leading to valuations rising 21.8% from April 2020 to September 2021,” said Timothy Cadigan, a Senior Vice President based in Avison Young’s New Jersey office. “Industrial investment activity in New Jersey maintained solid momentum in 2021 with $1.9 billion transacting through the third quarter. The year is expected to finish off strong, as uncertainty regarding potential changes to federal capital gains taxes may push sellers to move quickly.”