New Jersey’s industrial sector continued to thrive in the second quarter of 2014, with deal volume remaining at the strong pace set at the start of the year. Leasing activity in Central New Jersey easily surpassed the rest of the state this quarter, according to JLL.
New Jersey’s industrial market posted total net absorption of nearly 2.0 million square feet in the second quarter of 2014, compared with 1.0 million square feet absorbed in the first quarter and approximately 800,000 square feet of negative absorption one year ago. Nearly 1.9 million square feet of the absorption posted this quarter took place in the Central New Jersey market.
Since climbing above 9.0 percent at year-end 2009, New Jersey’s overall industrial vacancy rate has trended lower through midyear 2014 in response to strong demand for warehouse/distribution space. The state’s overall industrial vacancy rate has remained below 8.0 percent for the past three consecutive quarters.
Capital markets activity in New Jersey rebounded slightly in the second quarter, but remained constrained compared to one year ago. In one of the largest sales completed this quarter, L&B Realty Advisors LLP acquired 10 industrial properties, totaling 861,485 square feet, throughout Northern and Central New Jersey from Sitex Group LLC for $91.3 million. In addition, North American Terminals bought a 115,078-square-foot facility along with a 78,600-square-foot truck terminal in Elizabeth from Bilkays Express Co. for $20.6 million.
“Pricing has continued to trend higher throughout New Jersey, due primarily to strong leasing activity thus far this year” said David Knee, senior managing director at JLL. “The combination of rising industrial rental rates and ongoing low interest rates should drive higher sales volume and pricing in the second half of the year.”
Approximately 5.3 million square feet of industrial product was under construction in New Jersey in the second quarter of 2014, compared with approximately 7.6 million square feet the previous quarter. Tenants have pre-leased about 1.6 million square feet of the industrial space currently under construction.
The amount of new industrial projects either approved or underway has increased dramatically over the past year in New Jersey. The majority of the construction is centered around the Turnpike Corridor, with 16.3 million square feet in projects, and the Port of New York/New Jersey, with 7.3 million square feet in developments. All of this industrial space could be delivered over the next two years.
Other highlights from JLL’s second quarter 2014 industrial market report include: