C&W Reports Another Strong Quarter for N.J. Industrial
Strong Leasing, Uptick in Rents and Improved Occupancy Illustrate Momentum.
- Bergen-Passaic, NJ (1888PressRelease) July 10, 2014 - Strong leasing, an uptick in rents and improved occupancy levels in most major submarkets punctuated another quarter of progress for New Jersey industrial real estate, according to Cushman & Wakefield. The commercial real estate services firm today released its mid-year 2014 research results, which show continued progress for the state's 614.5 million-square-foot industrial sector.
"For the second straight quarter, new demand exceeded 6.0 million square feet in our market, pushing the year-to-date industrial leasing total to its highest level since before the recession," noted Cushman & Wakefield's Kim Brennan, New Jersey market leader. "We recorded 13 transactions in excess of 100,000 square feet during the past three months."
The majority of those larger transactions took place in the state's central counties, with the Exit 8A market hosting more than 1.7 million square feet in deal volume. This included a 611,320-square-foot commitment by OHL at 1 Costco Way in Monroe, and a 422,198-square-foot lease by Tyler Distribution Centers at 200 Liberty Way in Cranbury. Further north in the Meadowlands, Ferguson Plumbing inked a lease for 450,318 square feet at 50-100 Meadowlands Parkway in Secaucus.
"Third-party logistics firms and online retailers are among the most active industrial tenants and represent the bulk of the 'blockbuster' deals," Brennan said. "Larger tenants continue to seek modern warehouse/distribution space with a minimum 32' clear ceiling heights. Direct asking rents within this niche continue to trend upward, albeit modestly as quality space continues to dwindle." The current average, $5.61 per square foot, has risen 8.3 percent since one year ago.
Year-to-date, the New Jersey industrial market has seen more than 5.8 million square feet of space absorbed - the highest amount recorded during the first half of a year in recent history, according to Cushman & Wakefield. Brennan noted that while demand will remain robust, construction deliveries may keep absorption and the vacancy rate more stable in the coming months.
"More than 900,000 square feet of speculative construction was delivered during the second quarter, which prevented the state's vacancy rate from falling even further than it did," Brennan said. "We anticipate that another 3.0 million square feet of speculative construction will be completed during the second half of the year. In total, New Jersey should see more than 8.5 square feet of construction completions - both spec and build-to-suit - in 2014, the highest annual total in 13 years."
The most significant second-quarter construction completions included Amazon's 1.0 million-square-foot facility in Robbinsville and Falken Tire Corporation's 222,000-square-foot building at Matrix Business Park in Robbinsville. Major projects under development include The Morris Companies' 695,000-square-foot speculative project in Edison and Goya Food's new 628,000-square-foot Jersey City operation.
"In the near term, we anticipate the continued escalation of direct asking rents as quality space dwindles and demand for Class B space to rise further, especially along the New Jersey Turnpike," Brennan concluded. "And looking further ahead, with both online retail sales and manufacturing expected to trend higher in the next few years, New Jersey's proximity to dense population centers positions it for continued solid performance."
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