Northern and Central New Jersey’s industrial sectors saw new deliveries of space in Q2 2023, providing relief to a perennially constrained market according to CBRE’s Q2 NJ Industrial Figures. As a result of construction completions, the vacancy rate jumped 100 basis points (bps) to a still exceptionally low 3.7% during the quarter, a more stable level after many years of extremely tight supply conditions.
During Q2, 4.2 million sq. ft. of industrial space was leased to a more diverse tenant base when compared to more recent periods. Average asking rents remained relatively flat for the quarter, closing at $19.40 per sq. ft. for NNN/Class A space.
Class A net absorption was negative 1.9 million sq. ft. due to the 5.4 million sq. ft. of newly completed properties entering the market thus far in 2023.
“Several macroeconomic factors affected tenant decision-making in the second quarter, resulting in a decrease in leasing velocity,” said Kevin Dudley, executive vice president at CBRE. “However, several large requirements being reported point to a strong increase in demand in the second half of the year. New Jersey’s industrial market is one of the strongest in the country and has been well-positioned to remain healthy.”
Northern and Central New Jersey’s direct leasing and renewal activity in Q2 was exceptionally diverse with Third Party Logistics (3PL) tenants accounting for only 25% of total activity compared with 52% in Q1 2023 and 39% in Q4 2022. Velocity by industry was led by Wholesale & Retail at 41%, 3PL at 25%, Food & Beverage at 16%, and Manufacturing at 13%.
Among the most notable transactions in Q2 were diverse product supplier LVMH Group’s 888,826 sq. ft. lease at 258 Prospect Plains Road in Cranbury; a 480,425 sq. ft. renewal by S&S Activewear LLC at 16 Applegate Drive in Robbinsville; and a 167,500 sq. ft. commitment by healthcare and life sciences product provider Getinge at 148 Princeton Hightstown Road in Hightstown.
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