New Jersey Industrial Snapshot

On Jan 23, 2015

DTZ, Chatham, a commercial real estate services firm, released its Fourth Quarter 2014 Industrial Market Snapshot for Northern and Central New Jersey. The industrial markets in both Northern and Central New Jersey posted robust numbers in the fourth quarter with strong positive absorption.

The Northern New Jersey industrial market recorded net absorption of 758,157 square feet in the fourth quarter, the highest absorption since the first quarter of 2013. Vacancy fell 10 basis points to 7.9% from the third quarter of 2014. Despite the uptick in performance, the Northern New Jersey industrial market did not perform as well over the year with 593,419 square feet of negative absorption for 2014.

The Central Bergen, Meadowlands and Port/Airport submarkets were primarily responsible for the positive fourth quarter performance, with significant leases causing availability to drop. In Central Bergen, availability dropped 50 basis points to 7%, while the Meadowlands area declined 70 basis points to 6.2%. The Port/Airport region fell 90 basis points to 5.8%.

For the year, the fall in absorption and escalation in vacancy can be partially attributed to large vacancies in the Passaic submarket, including the Hoffman La Roche campus, 40-50 Seaview Drive and 550 Meadowlands Parkway, which also contributed to falling asking rents.

The Central New Jersey industrial market continued to improve as 2014 drew to a close with 787,294 square feet of positive absorption. Vacancy fell to 7.2%, and asking rents rose from $5.35 to $5.42 per square foot as demand along the New Jersey Turnpike corridor increased. Several submarkets saw a decline in vacancy, including the Western 287 submarket with a 3.2% drop quarter over quarter, as SHI International Corporation leased 305,751 square feet. Furthermore, a significant lease by Festo Didactics in the Monmouth submarket spurred a rise in absorption, and a purchase by JB Cocoa Incorporated also positively impacted the Exit 9 submarket.

Over the year, positive absorption totaled over 2 million square feet in Central New Jersey, making it the sixth year in a row of positive absorption. In Northern New Jersey, bidding contests will drive sale prices higher over the next 12 months. Overall, the market is on a fast track to an even stronger 2015 as developers take advantage of the improving conditions. As a result, rents are expected to ascend as demand for newer, quality warehouse and industrial space increases while supplies dwindle.

“The strong market conditions in the fourth quarter point to an even better 2015 with sturdy leasing and sales activity,” said Doug Bansbach, Senior Vice President of DTZ. “There is still potential for growth in Northern New Jersey, as several submarkets are weighed down with large vacancies. Meanwhile, Central New Jersey continues to shine with increasing demand.

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