CBRE Group New Jersey Q2 2015 Industrial MarketView Report

On Aug 18, 2015

According to CBRE Group, Inc.’s Q2 2015 New Jersey Industrial MarketView Report, New Jersey’s industrial market continued its quarter-over-quarter forward progression in Q2 2015, primarily driven by increased demand, decreased supply and a healthy pipeline of construction activity.

Led by multiple large lease transactions, 6.24 million square feet of leasing velocity in the second quarter drove a 21.8 percent increase in velocity over the previous quarter. Especially notable, Class A leasing accounted for 51.8 percent of total activity in Q2 2015.

“While Class A assets account for only 8.7 percent of the overall New Jersey industrial market, more than half of the leasing activity recorded this quarter involved Class A inventory,” said Thomas Monahan, senior vice president, CBRE. “This remarkable statistic supports the trend of industrial occupiers heavily relying on the state’s supply of Class A space.”

Demand this quarter continued to center around New Jersey’s core industrial markets. The Route 287/Exit 10, Carteret/Avenel, Meadowlands and Hudson Waterfront submarkets saw 1.43 million sq. ft., 1.08 million sq. ft., 971,000 sq. ft., and 930,000 sq. ft. of witnessed velocity respectively.

In Q2 2015, Amazon became a market-driving tenant in New Jersey as it expanded its total footprint in the state to 3.12 million sq. ft. The company committed to an additional 1.20 million sq. ft. this quarter between three requirements, including 1.06 million sq. ft. in the Carteret/Avenel submarket. In addition, Amazon has two active requirements of 60,000 sq. ft. to support its two-hour delivery operations in the New York metropolitan area.

“As consumer demand for same day delivery increases, warehouse operations like Amazon will further fuel demand throughout the New Jersey industrial market,” said Scott Belfer, senior vice president, CBRE. “Supply chain logistics and warehouse operations are continually evolving to meet customer expectations and New Jersey’s growing stock of Class A inventory will continue to support such needs.”

Additional notable transactions in Q2 2015 included Romark Logistics’ commitment to 359,950 sq. ft. in Route 287/Exit 10, FedEx’s addition of 315,389 sq. ft. in the Waterfront submarket and YMF’s commitment to 200,000 sq. ft. at Exit 8A. Strong industrial leasing performance drove New Jersey’s overall availability rate down from 9.2 percent in Q1 2015 to 8.7 percent —the lowest mark since Q2 2008, resulting in 2.91 million sq. ft. of positive net absorption. The drop in availability represents the biggest quarterly improvement since Q2 2011.

Increased demand and tightening supply continue to drive new construction in New Jersey. In Q2 2015, four projects totaling 994,276 sq. ft. were delivered to the market and six new projects totaling 879,700 sq. ft. broke ground. Of the 16 projects totaling 3.65 million sq. ft. under construction, 77.9% percentis slated for completion by the end of 2015.

 

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