industrial real estate

Colliers Q3 Report: Northern/Central NJ Industrial Market Still Robust, Surpasses 2014 Totals

The Northern and Central New Jersey industrial market remained robust in the third quarter, with traditional retailers and logistics companies driving two-thirds of all leasing activity, according to research from Colliers International. Modern-generation buildings and new construction projects continued to attract a large portion of that demand, as New Jersey continues to face supply constraints on industrial product.

Although the 9.5 msf of third quarter industrial leasing activity in Northern and Central New Jersey was down 12.9 percent from 10.9 msf the previous quarter, it was still up 40 percent from the 6.8 msf recorded a year ago, and 10.2 percent above the ten-year quarterly average. In addition, the year-to-date leasing total of 31.8 msf already exceeds the 2014 full-year total of 29.9 msf, on pace to reach the highest totals since 2012-2013, which each registered 39 msf.

The continued leasing momentum also improved the overall third quarter availability rate to 10.6 percent, down 50 basis points (bps) from 11.1 percent the previous quarter — its lowest level since the first quarter of 2010 — and down 150 bps from 12.2 percent year-over-year. At 5.7 msf, Northern and Central New Jersey also registered its 11th consecutive quarter of positive net absorption, compared with 3.8 msf in the second quarter and 3.9 msf the prior year

Furthermore, overall third quarter asking rents for warehouse space — the predominant subset of all industrial property types — in Northern and Central New Jersey reached $5.68/sf, up slightly from $5.60/sf the previous quarter and $5.46/sf year-over-year. Third quarter asking rents were also up 15 percent from the five-year low in 2011, with no signs of weakening.

“The industrial sector in Northern and Central New Jersey remains strong, with 29 percent of the overall leasing activity occurring in the Class A sector,” said David A. Simon, SIOR, Executive Managing Director and Market Leader for the New Jersey operations of Colliers International. “In Northern New Jersey there was a 72 percent increase in net absorption compared with the prior quarter. In Central New Jersey, Class A inventory achieved rental rates 18.6 percent above average asking rents. Demand for this product, coupled with a limited supply, is driving new construction.”


Northern New Jersey’s third quarter industrial leasing activity totaled 3.8 msf, down 13.6 percent from 4.4 msf last quarter but up 5.9 percent from 3.6 msf a year ago. Almost 60 percent of the activity was in the Port market and the Meadowlands submarkets, given their location near the ports and proximity to New York City

Major third quarter transactions included Office Star Product’s 216,049-sf lease at 1 Lladro Drive in Moonachie in the Meadowlands market, and Atlantic USA’s 160,000-sf lease at address in the Port market.

The third quarter also registered a 10.5 percent availability rate, a 50 bps improvement over the 11.0 percent rate the previous quarter, and a 100 bps improvement over the 11.5 percent rate a year ago. The third quarter also registered 2.2 msf of positive absorption, up from 1.3 msf in the second quarter.

And at $6.20/sf, average asking rents in Northern New Jersey for warehouse space were flat compared with the second quarter, but up from $5.97/sf a year ago.


Central New Jersey continued to attract the majority of industrial demand within the State, accounting for 60.3 percent of all leasing activity. The third quarter’s 5.7 msf was down 12.4 percent from 6.6 msf last quarter, but up an impressive 76.6 percent from 3.3 msf a year ago, driven in large part by the growth of e-commerce that has translated into significant demand for warehouse space.

Net absorption in Central New Jersey totaled positive 3.4 msf, up from the positive 2.5 msf recorded last quarter, and up from the 1.1 msf a year ago. The overall availability rate was 10.7 percent, a 67 bps improvement over the 11.3 percent the previous quarter and a 230 bps improvement over the 13.0 percent a year ago.

At $5.09/sf, average asking rents for warehouse space were up over the $4.93/sf last quarter and $4.89/sf a year ago — while surpassing the $5.00/sf barrier for the first time since the fourth quarter of 2008. In addition, 37.2 percent of all third quarter industrial leasing in Central New Jersey occurred in Class A properties, a building class that comprises less than 19 percent of the total Central New Jersey industrial inventory.

“Constrained supply is evident in the submarkets along the New Jersey Turnpike such as Exits 10, 9, and 8A, whose availability rates are all below 10 percent,” said John Obeid, Senior Director, Research, for Colliers New Jersey operations. “Most notably, at 8.9 percent, the availability rate at Exit 9 dropped below 10 percent for the first time since 2008. Strong market fundamentals in Central New Jersey can be attributed to the increase in consumer confidence and sustained demand for Class A product.”

Additional highlights from Colliers International’s 2015 Q3 New Jersey analysis include:

  • Notable deals included: Serta’s 460,000-sf lease at 50 Bryla Street in Carteret; LG Electronics’ 471,000-sf renewal at 380 Deans Hall Road in South Brunswick, and Sappi North America’s 357,829-sf renewal at 1 Industrial Road in Dayton.
  • Modern-generation buildings and new construction projects attracted 29 percent of the quarter’s leasing activity — even as Class A space accounts for less than 10 percent of New Jersey’s total industrial inventory.
  • With increasing constraints on New Jersey’s industrial supply, the State has seen a significant uptick in new developments. After six completions and eight new projects breaking ground this quarter, there are now 18 projects totaling 4.6 msf underway, of which 86 percent is being built on spec. Notable starts include:

o   125 North Street, a 220,883-sf warehouse property being built on spec in Teterboro by Forsgate Industrial;

o   377-387 Davidson Mill Road, a 488,800-sf warehouse property being built on spec in South Brunswick by Bridge Development;

o   335 Ridge Road, a 496,320-sf warehouse property being built on spec by Clarion Partners in South Brunswick.

·         The Port of New York and New Jersey saw total traffic rise last month, continuing a trend of strong import activity, and resisting signs of a slowdown in global trade and unease about the economic health of major trade partners.

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