New Jersey’s industrial market continued to show market fundamentals and robust leasing
volume amid supply constraints in the first quarter of 2022, according to a new market snapshot from Colliers.
While the availability rate continued to sit at all-time lows, leasing activity increased 48.2% quarter-over-quarter, to 11 million square feet, and was evenly distributed between
the northern and central portions of New Jersey. Activity this quarter was driven by manufacturing users and logistics companies, which accounted for half of the leasing volume.
In one of the largest transactions of the quarter, Keurig leased 499,898 square feet at 24 Applegate Drive in Robbinsville, while ZT Group International leased 425,000 square feet at 1 Emerson Lane in Secaucus.
Sustained positive net absorption this quarter lowered the availability rate to 2.9% — the lowest recorded rate on record. Net absorption totaled positive 3.3 million square feet, up
111.6% from last quarter and was driven by strong preleasing activity in recently delivered product. 72.3% of the 2.4 million square feet of newly developed space was occupied, which contributed to 1.5 million square feet of occupancy gains. The largest new warehouse totaled 873,743 square feet at 173-268 Doremus Ave. in Newark, which was preleased to FedEx.
It is important to note that Central Jersey recorded its lowest absorption total since Q3 2009 at negative 628,101 square feet. Two new availabilities totaling 1.1 million square feet in Exit 8A contributed to negative absorption. The largest was 889,826 square feet at 258 Prospect Plains Road, followed by a new 248,611 square feet block at 1165 Cranbury South River Road. The shortage of available supply to lease in central New Jersey resulted in a slowdown of occupancy gains; however, in a market where just 2.8% of the inventory is available for lease, newly available space provides opportunities for occupiers that did not exist before.
Other key industrial market takeaways:
- The average asking rent for industrial space in New Jersey remained above $12 per square foot for the second consecutive quarter, and is up 21.1% year-over-year, to $12.16 per square foot.
- Robust cargo volumes at the Port Authority of New York and New Jersey continued into 2022, with 765,050 20-foot equivalent units, or TEUs, recorded in January.
- Sale/leaseback activity has picked up steam, and the trend is poised to grow as pricing remains at record highs and investment capital continues to flow into industrial product.