N.J. industrial sector picked up in Q2 and first half, says JLL

A resurgence in large-scale industrial transactions drove second-quarter leasing to 10.6 million square feet, with five new Class A deals in the more-than 400,000-square-foot size segment, according to data from JLL. Port South/Exit 12 and Burlington County continued to be a hotbed for leasing activity. 

Vacancy saw a minor increase of 20 basis points, while overall construction activity slowed resulting in just 9.6 million square feet under construction, marking a five-year low. 

Despite improving market fundamentals, some landlords continue to prioritize occupancy over maximizing rents, leading to asking rents 4.3% off their peak and increased concessions offered.

Strong first-half activity and limited construction point to a potential vacancy decline in the second half of 2025. Potential economic improvements could reduce uncertainty and bolster tenant activity. 

First-half leasing volume reached 18.7 million square feet, the highest level since 2021. A resurgence in large-scale transactions resulted in 10.6 million square feet of second quarter leasing. The 400,000-plus square-foot size segment accounted for five new Class A deals totaling 3.1 million square feet, the highest level since second quarter 2021.   

Port South/Exit 12 and Burlington County accounted for 67.1% of new Class A activity. Exit 12 benefited from one of the quarter’s largest leases as BroadRange Logistics secured the 479,700-square-foot space at 300 Salt Meadow Road, absorbing the last remaining availability at Crow Holdings’ industrial park in Carteret.

A key value of the Exit 12 submarket is as a cost-effective alternative to the ports. Consequently, landlords are adjusting rent expectations to prioritize occupancy, resulting in a 5.9% year-over-year decrease in average asking rents.

After a slow start to the year, Burlington County rebounded with more than 2.8 million square feet of leasing in the second quarter, leading the state. Class A leasing exceeding 100,000 square feet accounted for 95.2% of total volume.

The quarter’s most significant transactions were Maersk’s 1.2 million square-foot lease at Logistics Property Co’s 995 Taylor Lane in Cinnaminson and JD.com’s lease of Exeter’s 704,700 square-foot asset at 4259 US-130 in Edgewater Park. 

Vacancy continues to plateau across the state increasing just 20 basis points in the second quarter, versus the trailing 10-quarter average of 55 basis points. Overall construction activity continues to drop as ground breakings slow. The most notable project that commenced this quarter was Brookfield’s Raritan River Logistics Center in Perth Amboy, set to introduce 971,962 square feet of new Class A space to the Exit 10 submarket.

Despite fundamentals improving across the state, some landlords with aging vacancies continue to prioritize occupancy rather than achieving top-of-the-market rents. This has been evident in overall asking rents 4.3% off their peak, with landlords offering increased concessions such as free rent and tenant improvement packages. 

Robust leasing and limited construction could combine to cause a drop in vacancy in the second half of 2025 for the first time in three years. Furthermore, more than 800,000 square feet of Class A space was signed late in the second quarter and is poised to positively impact third-quarter absorption. 

Despite economic and geopolitical headwinds, H1 activity was strong, building optimism for the remainder of the year. Trade deals, tax resolutions, and potentially lower interest rates could combine to decrease uncertainty in the economy and further bolster tenant activity.