CBRE Q1 industrial report: Leasing activity more than doubled and rent reached a new high ($12.21 per SF)

New Jersey’s industrial market reached new highs in almost every metric, quarter-over-quarter, according to CBRE’s Q1 2022 Figures report, which was released Wednesday.

Leasing activity, which excludes renewals, was 6.2 million SF — more than double the previous quarter. During Q1, net absorption (of 1.5 million SF) was positive for the 21st consecutive quarter, while the average asking rent broke another record and ended the quarter at $12.21 per SF, a 20% increase over the previous quarter.

The only downturn came on the investment sales front, as the N.J. industrial sector slowed significantly. In fact, sales volume dropped 66% from the previous quarter to end Q1 2022 at $546 million.

Despite this, CBRE Vice Chairman Thomas Monahan said industrial is still hot.

“The industrial market in Northern and Central New Jersey exhibited strong dynamics during the first quarter, continuing the scorching pace it has set over the past few years,” he said.

“Given the unrelenting demand and tight supply, we are now seeing a major surge in new construction activity, increasing by 16% quarter-over-quarter to 15.4 million SF. Large projects are getting underway in the Hunterdon/Warren, Exit 8A and Linden/Elizabeth submarkets,” Monahan continued.

According to the report, 33 leases were consummated in the first quarter that were 100,000 sq. ft. or larger — a notable increase when compared to 18 deals completed in the fourth quarter of last year for similar space.

Most transactions took place in Northern New Jersey, which saw leasing reach 3.2 million SF.

Zt Group’s 425,000 SF commitment at 1 Syms Way in Secaucus was the largest recorded in the submarket during the quarter, followed by Equinix’s 340,000 SF lease at 600 Jefferson Ave., also in Secaucus.

Leasing in Central Jersey exploded to 3.0 million SF, more than doubling from the prior quarter. The largest lease was Berlin Packaging’s 154,000 SF at 2 Capital Dr. in Cranbury. Access Bio’s sublease of 153,000 SF at 7 Fitzgerald Ave. was the second largest deal in Central Jersey.

The positive absorption is mostly due to pre-leasing on newly constructed facilities.

The Newark and Meadowlands submarkets led the way, with net absorption of 974,000 SF and 730,000 SF, respectively.