According to CBRE Group Inc.’s Q4 2015 New Jersey Industrial MarketView Report, the state’s industrial market experienced a strong finish to 2015 as it continued the recovery toward pre-recessionary levels. New Jersey’s overall availability rate dropped to 7.8 percent—the lowest recorded availability rate since Q1 2008.
For the fourth consecutive quarter, New Jersey’s industrial market surpassed the 5 million square feet quarterly leasing mark, with 7.02 million sq. ft. of new lease commitments. This robust demand carried annual velocity to 24.28 million sq. ft.—a 21.7 percent increase over 2014 levels and the second highest annual leasing figure in the past nine years.
Demand continued to concentrate in central New Jersey, accounting for 66.9 percent of the state’s total leasing velocity, while activity in northern New Jersey remained stable. Class A product continues to drive occupier demand, accounting for 41 percent of the state’s new lease commitments in the fourth quarter, especially notable given that Class A inventory accounts for only 9.6 percent of the state’s total inventory.
“Diminishing availability – coupled with a healthy construction pipeline to support the growing need for modern industrial space – indicates confidence in the New Jersey industrial market,” said Mindy Lissner, executive vice president, CBRE. “More notably, perhaps, is that this activity strongly suggests continued momentum in 2016.”
Cumulatively, the Exit 8A, Carteret/Avenel, Route 287/Exit 10 and Hudson Waterfront submarkets captured 64.3 percent of velocity, with 1.25 million sq. ft., 1.19 million sq. ft., 1.14 million sq. ft. and 927,000 sq. ft., respectively. The market recorded 22 new lease transactions greater than 100,000 sq. ft., of which 13 were greater than 200,000 sq. ft. Notable transactions included:
New Jersey’s industrial market absorbed 888,000 sq. ft. of available space during Q4 2015, curbing the state’s availability rate to 7.8 percent—the first time in seven years that the state’s availability rate dipped below 8 percent. Total absorption for the year amounted to 7.77 million sq. ft.
In Q4 2015, five projects totaling 691,949 sq. ft. were delivered to the market and six new projects totaling two million sq. ft. broke ground, bringing the total number of projects currently under construction to 19. With 2015 seeing the most construction starts in the past two decades, 2016 will set a record for new construction deliveries.
“Increased demand, aggressive New Jersey State Incentives and tightening supply continue to drive new construction asking prices higher each quarter in New Jersey,” said Nicholas Nitti, first vice president, CBRE. “With an average absorption time of five months after completion, demand for all warehouses will continue to be supported by New Jersey’s aggressive industrial construction pipeline.”
Activity at the New York and New Jersey port terminals remains strong, with year-to-date loaded container traffic in TEUs up 6 percent over the same period last year. The Port Authority is continuing to partake in the U.S. port industry’s “east coast race” to upgrade infrastructure in preparation for the larger cargo vessels that will pass through the Panama Canal. New Jersey and the Port Authority are continuing their “Raise the Roadway” project, which will add an additional 64 feet of air draft to the Bayonne Bridge.Related Articles: