New Jersey’s industrial sector saw a tremendous amount of new product delivered to the market in the third quarter of 2014, according to JLL. Approximately 3.7 million square feet of industrial space was delivered throughout the state in that three-month period, with around 1.2 million square feet pre-leased.
The most notable deliveries were both located in Jersey City. Prologis finished its 878,264-square-foot Pulaski Distribution Center, which was fully leased to Imperial Bag & Paper and Royal Ahold. In addition, Goya Foods completed its new 650,000-square-foot regional distribution center. These completions helped push net absorption in Northern New Jersey to its highest level of the year.
“Although New Jersey’s economy continued to lag the national economy in the third quarter, the rapid pace of industrial expansion throughout the state has not slowed,” said David Knee, senior managing director at JLL. “Landlord-favorable conditions persist throughout the New Jersey industrial market, as asking rents continue to increase, and vacancy rates dip lower. New construction projects are under way to tap the large number of users seeking Class A industrial space for their operations.”
New Jersey’s industrial market posted total positive net absorption of 3.0 million square feet in the third quarter of 2014, compared to 1.8 million square feet absorbed in the second quarter and approximately 1.4 million square feet of absorption in the third quarter one year ago. The state has recorded about 5.93 million square feet of total net absorption year-to-date.
Since climbing above 9.0 percent at year-end 2009, New Jersey’s overall industrial vacancy rate has trended lower through third-quarter 2014 in response to strong demand for warehouse/distribution space. The state’s overall industrial vacancy rate has remained below eight percent for the past four consecutive quarters.
Capital markets activity in New Jersey remained strong in the third quarter, with industrial sale prices increasing about 16.4 percent compared to one year ago. In one of the largest sales completed this quarter, TA Associates Realty acquired two properties, a 212,940-square-foot facility in Mahwah and a 18,165-square-foot facility in Moonachie, from Sitex Group LLC for $24.25 million. In addition, Principal Real Estate Investors bought 1 Lladro Drive, a 216,000-square-foot warehouse and distribution facility in Moonachie, from Lladro USA Inc. for an estimated $18.0 million.
Other highlights from JLL’s third-quarter 2014 industrial market report include: